OPEC remains optimistic that the world will see robust oil demand growth this year and next amid improving economies and further upside potential in global economic growth.
In its closely-watched Monthly Oil Market Report (MOMR) published on Tuesday, OPEC revised up slightly its global economic growth forecast for this year to 2.8%, up by 0.1 percentage point compared to its report from last month. The cartel left its 2025 economic growth projection unchanged at 2.9%.
“While some downside risks persist, a continuation of the expected momentum from the beginning of the year could result in additional upside potential for global economic growth in 2024,” OPEC said.
Current expectations point to ongoing easing of inflation throughout 2024 and 2025, especially in major economies, which supports a more positive trend in economic growth. A rise in real-income levels, improved consumer purchasing power, and forecasts that major central banks will start reducing interest rates this year are all supportive of economies, OPEC said. Related: Europe’s Secret Weapon In Its Energy War With Russia
“There exists the possibility of additional upside to global economic growth, particularly if inflation decreases at a faster rate than currently anticipated,” the cartel noted, adding that India and China also have the potential to provide further impetus to global economic growth in both 2024 and 2025.
“Furthermore, the 2024 and 2025 growth trajectories of India, China, as well as the US, could exceed current expectations,” OPEC said in its monthly report.
Against these expectations of global economic growth, OPEC left its oil demand growth forecasts unchanged from the February report, expecting global oil demand to expand by a “robust” 2.2 million barrels per day (bpd) in 2024, and to see another 1.8 million bpd annual growth in 2025. Non-OECD economies will contribute the most to oil demand growth, nearly 2 million bpd in 2024 and 1.7 million bpd in 2025, OPEC said.
By Charles Kennedy for Oilprice.com
ADVERTISEMENT
More Top Reads From Oilprice.com:
- This Could Be A Gamechanger For Natural Gas In Europe
- Oil Prices May Yet End the Week on a High Note
- Russia’s Coal Exports to Asia Slump Amid Intense Competition
OPEC+ projects that oil demand will grow in 2024 by 2.2 million barrels a day (mbd) and 1.8 mbd by 2025. China-led Asia-Pacific region will contribute nearly 2.0 mbd or 91% to this growth in 2024 and 1.7 mbd or 94% in 2025 thus confirming that they are the real drivers of the global economy and oil demand.
OPEC expects oil demand to hit 110 mbd by 2028 and 116 mbd by 2045 when the IEA is projecting that oil demand peak will be reached before 2030. While OPEC's projections are based on a solid knowledge of the market away from politics , the IEA's is based on a flawed assumption and wishful thinking that the rise in EV demand will steeply reduce oil demand thus reaching peak oil demand by 2030. The IEA's projection will prove absolutely inaccurate.
Dr Mamdouh G Salameh
International Oil Economist
Glonal Energy Expert