The Organization of Petroleum Exporting Countries (OPEC) has expressed optimism about oil demand growth prospect next year despite the current market slowdown in the global market.
Sources close to the oil cartel hinted that it would 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.
According to the sources, the 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 per cent, an abnormally high rate as the world moves out of the coronavirus pandemic.
But then, 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.
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.
One of the OPEC sources said that “it can be expected that the increase in oil demand in 2024 will be much lower than 2023”, 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.
Another source was quoted on the OPEC’s 2024 demand view as saying that “it will be more bullish than the IEA.”
Top officials from OPEC countries at a conference this week, including CEO of state-owned oil producer Saudi Aramco, Amin Nasser, expressed optimism over the oil demand outlook despite economic headwinds weighing on prices.
He said: “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.”
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.
The 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.
