Opec has again doubled down on its bullish oil demand growth forecast for this year, keeping it unchanged for a 12th consecutive month.
In its latest Monthly Oil Market Report (MOMR), Opec forecasts oil demand to grow by 2.25mn b/d, unchanged since it first published a projection for 2024 in July last year. It kept its oil demand growth projection for next year at 1.85mn b/d, unchanged from when it was first forecast in January 2024.
The unchanging nature of Opec's 2024 oil demand figures is notable given that this far into a year oil demand forecasts are typically altered — sometimes by very small margins — as more economic and consumption data become available.
The gap between Opec and other forecasters has grown in recent months, as the EIA and IEA have downgraded their oil demand growth estimates for this year. The EIA forecasts demand will increase by 1.1mn b/d, while the IEA puts it lower at 960,000 b/d.
Opec said the US Federal Reserve's cautious approach to monetary policy and the high interest rate environment was increasing costs of capital, particularly in the US market, which is limiting investment in upstream exploration and production. It said high interest rates were supporting a strong US dollar, which was resulting in higher commodity prices.
But Opec said the Fed could begin to cut rates in the latter half of the year given strong US growth and "a downward trend in global inflationary pressures."
On the supply side, the group kept its non-Opec+ liquids supply growth estimate for 2024 and 2025 unchanged at 1.23mn b/d and 1.10mn b/d, respectively. It said non-Opec+ growth for 2024 would be mostly driven by the US, Canada and Brazil.
Opec+ crude production fell by 125,000 b/d to 40.8mn b/d in June, according to an average of secondary sources that includes Argus. This is around 2.3mn b/d below Opec's projected call on Opec+ crude, which it sees at 43.1mn b/d.
