OPEC upbeat over 2024 oil demand outlook despite slowdown

VIENNA  – OPEC will likely maintain an upbeat view on oil demand growth for next year when it publishes its first outlook later this month, predicting a slowdown from this year but still an above-average increase, sources close to OPEC said.

OPEC‘s forecast for 2024 will likely be lower than the growth it expects for this year of 2.35 million barrels per day, or 2.4 percent, an abnormally high rate as the world moves out of the coronavirus pandemic.

Even so, it would still be well above the annual average of the past decade with the exception of the pandemic years and above predictions by the International Energy Agency (IEA), which sees a major slowdown in demand growth next year to 860,000 bpd.

OPEC and the IEA have repeatedly clashed in recent years, with OPEC criticizing the IEA, which advises industrialized countries, for what it sees as irresponsible predictions and subsequent data revisions.

Oil demand growth is an indication of likely oil market strength and forms part of the backdrop for policy decisions by OPEC and its allies, known as OPEC+. The group in June extended supply curbs into 2024 to support the market as concern over weakening demand pressured prices.

For 2024, three OPEC sources said that while demand growth was likely to show a slowdown, it would not be as severe as the IEA predicts, and growth will likely be above 1 million bpd and below 2 million bpd. A fourth source close to OPEC said demand will likely rise by at least 1.5 million bpd.

“It can be expected that the increase in oil demand in 2024 will be much lower than 2023,” one of the OPEC sources said, adding that it could be between 1.5 million and 1.7 million bpd.

OPEC is expected to publish its first demand forecast for 2024 in its monthly report on July 13. OPEC did not immediately respond on Thursday to an emailed request for comment.

“It will be more bullish than the IEA,” another source said of OPEC‘s 2024 demand view.

Top officials from OPEC countries at a conference this week such as Amin Nasser, CEO of state-owned oil producer Saudi Aramco, expressed optimism over the oil demand outlook despite economic headwinds weighing on prices.

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“Asia is growing. China alone between 2019 and 2023, three million bpd growth, India one million bpd growth, so there is a pick-up in demand,” he said.

Oil demand forecasters often have to make sizeable revisions given changes in the economic outlook and geopolitical uncertainties, which this year included China’s lifting of coronavirus lockdowns and rising interest rates.

OPEC originally predicted demand growth in 2023 of 2.7 million bpd in its first forecast published in July 2022, later revising it down to 2.35 million bpd.