For the first time, Opec has downgraded its global oil demand growth forecasts for 2024 and 2025.
In its latest Monthly Oil Market Report (MOMR), the group has revised down its demand growth projection for 2024 to 2.11mn b/d from 2.25mn b/d, having previously kept the forecast for this year unchanged since it was first released in July 2023.
Opec put the revision primarily down to "softening expectations for China's oil demand growth" and actual data received for the first half of the year. It now sees Chinese oil demand growing by 700,000 b/d this year, down by 60,000 b/d compared with last month's report.
Opec has also cut its oil demand growth forecast for next year by 60,000 b/d to 1.78mn b/d, driven by a lower than previously expected rise in Middle East consumption.
The group's latest oil demand growth projections narrow the gap with other forecasters such as the IEA and EIA, but Opec's figures are still comparatively bullish. The IEA projects oil demand will increase by 970,000 b/d this year, while the EIA sees demand rising by 1.1mn b/d. Opec notes that its new growth forecast of 2.11mn b/d for this year is "well above the historical average of 1.4mn b/d seen prior to the Covid-19 pandemic".
Opec puts recent oil price falls down to sentiment "driven by speculative selloffs, easing geopolitical risk premiums and mixed economic indicators". Sentiment was also affected by uncertainty surrounding high interest rates in the US, concerns about China's economy and oil demand growth, as well as a slower-than-expected onset of the driving season, it said.
On the supply side, the group has kept its non-Opec+ liquids 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 — including Mexico — rose by 117,000 b/d b/d to 40.907mn b/d in July, according to an average of secondary sources that includes Argus. This is around 2.09mn b/d below Opec's projected call on Opec+ crude for this year, which it sees at 43mn b/d.
