OPEC has cut its forecast for global oil demand growth in 2024 for the third consecutive time, citing data received so far this year. According to the Organization of the Petroleum Exporting Countries’ monthly report, world oil demand is expected to rise by 1.93 million barrels per day (bpd) in 2024, down from the previously expected 2.03 million bpd.
This downward revision is largely attributed to China, which accounted for the bulk of the 2024 downgrade. OPEC trimmed its Chinese growth forecast to 580,000 bpd from 650,000 bpd, citing economic challenges and the country’s shift towards cleaner fuels. Despite government stimulus measures expected to support fourth-quarter demand, oil use is facing significant headwinds.
The organization noted that diesel consumption has been subdued due to slowing economic activity, particularly in building and housing construction. Additionally, the substitution of liquefied natural gas (LNG) for petroleum diesel fuel in heavy-duty trucks has contributed to the decline.
OPEC’s revised forecast puts it at the top end of industry estimates, despite the downward revision. However, there remains a wide split between forecasters on the strength of demand growth in 2024. Differences in demand projections from China and the pace of the world’s transition to cleaner fuels contribute to this uncertainty.
The organization also lowered its 2025 global demand growth estimate to 1.64 million bpd from 1.74 million bpd. This move reflects the ongoing challenges facing the oil industry, including the global shift towards cleaner energy sources.
In recent months, diesel consumption has been impacted by slowing economic activity, particularly in the construction sector. The substitution of LNG for petroleum diesel fuel in heavy-duty trucks has also contributed to the decline in oil demand.
OPEC’s decision to cut its forecast highlights the ongoing uncertainty in the global oil market. As the world transitions to cleaner fuels, oil demand is expected to decline, posing significant challenges to oil-producing countries.
The downward revision also reflects the impact of economic challenges on oil demand. Government stimulus measures are expected to support demand in the fourth quarter, but the overall outlook remains uncertain.
In the context of the global energy landscape, OPEC’s revised forecast has significant implications. The organization’s decision to cut its forecast underscores the need for oil-producing countries to adapt to changing market dynamics.
As the energy landscape continues to evolve, OPEC’s forecast will likely remain subject to revision. The organization’s ability to accurately predict oil demand will play a critical role in shaping the global energy market.
