Even Opec is now revising down its oil demand growth forecasts. But Opec+ members are still unlikely to change their plan to return 2.2mn b/d of voluntary production cuts to the market from October.
In its latest Monthly Oil Market Report, Opec lowered its 2024 oil demand growth forecast by 130,000 b/d and its 2025 projection by 60,000 b/d, to 2.11mn b/d and 1.78mn b/d, respectively. The outlook has raised questions about the Opec+ plan for some members to unwind output cuts from October. But even if Opec's latest data add to concerns over weakening oil demand — particularly in China — pressure from members eager to pump more oil could yet see Opec+ keep output policy unchanged.
Opec's revisions are small, but that the group changed its forecasts at all is significant. Opec had kept its 2024 and 2025 demand growth projections unchanged since first outlining them in July 2023 and January 2024, respectively (see graph). But its projections remain hugely bullish compared with the other key forecasters.
The IEA, for example, sees oil demand growing by less than 1mn b/d this year and next, and its 2024 forecast has fallen by 370,000 b/d since March. It also thinks the market will flip into a surplus of about 870,000 b/d next year. The IEA's more bearish numbers feed into its view that oil demand growth is set to peak in 2029 — much earlier than previously thought. In contrast, Opec sees oil demand continuing to grow beyond 2045.
The recent downgrades by the IEA and Opec centre around China — the world's long-standing driver of oil demand growth. The IEA says China's oil demand has fallen over the past few months, and is now set to grow by only 300,000 b/d in 2024 and 330,000 b/d in 2025 — at the start of the year it was guiding 710,000 b/d for 2024. Argus sees it much lower, at 100,000-200,000 b/d. But Opec has only reduced its Chinese oil demand projection for 2024 by 60,000 b/d to 700,000 b/d — raising questions over the extent to which it is factoring in the downturn of the construction sector and the rising uptake of electric vehicles in the country.
Wait and see
Opec's demand downgrade could factor into the looming final decision by eight members of Opec+ on whether to unwind 2.2mn b/d of voluntary production cuts starting in October, as agreed in June. But it is also true that the secretariat's outlook is only one of many that members look at when assessing oil demand — most of which are well below Opec's.
Even if demand is lower than expected, some members are still likely to resist any move to temper or delay the plan to release more oil to the market. The Opec+ deal in June was a compromise between members that argued cuts had gone on too long and those that stressed the need to keep production in check. Ministers and delegates are waiting to see how the market develops this month. But it may take something bigger than tweaks to demand forecasts to warrant a change in policy. A decision is expected in early September.
| Monthly oil outlooks | mn b/d | |||||||||||
| IEA OMR | Opec MOMR | EIA STEO | ||||||||||
| 2024 | ± prev | 2025 | ± prev | 2024 | ± prev | 2025 | ± prev | 2024 | ± prev | 2025 | ± prev | |
| Demand | 103.06 | -0.00 | 104.01 | -0.03 | 104.32 | -0.13 | 106.11 | -0.20 | 102.94 | 0.02 | 104.55 | -0.13 |
| Demand growth | 0.97 | -0.00 | 0.95 | -0.03 | 2.11 | -0.13 | 1.78 | -0.06 | 1.15 | 0.03 | 1.60 | -0.16 |
| Non-Opec* supply | 70.23 | -0.06 | 71.99 | 0.02 | 53.00 | 0.02 | 54.10 | 0.02 | 70.36 | -0.06 | 72.01 | -0.16 |
| Opec* NGLs | 5.58 | 0.00 | 5.68 | 0.00 | 8.33 | -0.01 | 8.37 | 0.00 | 5.32 | 0.00 | 5.28 | 0.00 |
| Call on Opec* | 27.24 | 0.06 | 26.34 | -0.05 | 42.99 | -0.14 | 43.63 | -0.22 | 27.25 | 0.09 | 27.26 | 0.03 |
| *Opec MOMR includes 10 non-Opec members of Opec+ in Opec supply | ||||||||||||
| — IEA Oil Market Report, Opec Monthly Oil Market Report, EIA Short-Term Energy Outlook | ||||||||||||
