OPEC Cuts Oil Demand Growth Forecast

In a surprising turn of events, OPEC has slashed its oil demand growth forecast for the third month in a row, raising concerns about the future of the oil market. On Monday, the cartel revealed in its Monthly Oil Market Report (MOMR) for October that it now expects global oil demand to grow by just 1.93 million barrels per day (bpd) in 2024. This marks a reduction of 106,000 bpd from last month’s predictions.

Reasons for the Revisions

The revisions stem from actual consumption data that has emerged this year, alongside lower expectations for oil demand in various regions. Most notably, the downward adjustment primarily reflects a reduction in China's anticipated demand growth. OPEC now estimates that China will see an increase of only 580,000 bpd, a notable decrease from the previous forecast of 650,000 bpd.

Current Consumption Trends

Current figures reveal that China's annual oil demand growth decelerated in August, registering just 83,000 bpd year-over-year, primarily propelled by robust requirements for petrochemical feedstock. OPEC attributed the slowdown in diesel consumption to a decline in economic activity, particularly in the construction sector, coupled with an increased reliance on liquefied natural gas (LNG) as an alternative to diesel fuel in heavy-duty trucks.

Future Projections

But it doesn’t stop there! OPEC has also slashed its oil demand forecast for 2025, now predicting an increase of 1.6 million bpd, down by 102,000 bpd from earlier estimates. Global oil demand is thus forecasted to average an impressive 105.8 million bpd next year.

Regional Insights

Interestingly, the growth in oil demand is expected to be spearheaded by developing economies in Asia and the Middle East, which are anticipated to contribute significantly—accounting for around 1.5 million bpd of the total growth—largely thanks to China, other Asian nations, the Middle East, and India. Meanwhile, developed economies, particularly in the Americas, will see a much more subdued increase of only 100,000 bpd.

Market Reactions and Geopolitical Factors

As global oil markets react to these revisions, analysts are keeping a keen eye on geopolitical factors, including tensions in the Middle East and shifts toward renewable energy. How this will impact oil prices and the overall market remains to be seen. Stay tuned for further updates!