Global oil demand in the summer is expected to be strong as consumption of transportation fuels is set to rise across the board and across regions with summer and holiday travel picking up, OPEC said on Thursday. The group sees a "robust oil demand outlook for the summer months."
Strong oil demand in the second and third quarters of this year could further tighten the market, especially if the OPEC+ group doesn't begin to ease the current production cuts in July.
In its closely-watched Monthly Oil Market Report (MOMR) published today, OPEC left its oil demand growth forecasts unchanged for this year and next.
OPEC continues to expect global oil demand growth of 2.2 million barrels per day (bpd) for 2024, broadly unchanged from last month's assessment. The cartel still sees "robust growth" of 1.8 million bpd in 2025 compared to 2024.
But OPEC noted a robust economic growth trend that could have further upside potential, including in the United States, which could outperform the current annual growth forecast.
"Despite some downside risks, the continuation of the momentum seen in the beginning of the year could result in further upside potential for global economic growth in 2024," OPEC said in its report.
"In the OECD, the US continues with steady momentum that may outperform the current annual growth forecast."
Even the Eurozone, which has seen many challenges over the past two years, "may see improvement supported by real income growth, an expected continued recovery in tourism towards the summer season and a gradual rebound in industrial production," OPEC said.
There are potential upsides in the major Asian economies, too.
"A more robust growth trajectory in Asian economies, predominantly India and China, has the potential to provide further impetus to global economic growth in both 2024 and 2025," according to OPEC.
In the summer, demand for all transportation fuels, especially jet fuel, is expected to rise compared to last year.
"Jet/kerosene markets are projected to show solid upward potential across regions in the coming months as air travel picks up," OPEC said.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More
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Comments
Moreover, OPEC+ is projecting a global demand of 110 mbd by 2028 rising to 116 mbd by 2045. This smashes into smithereens the IEA's projection that peak oil demand will be reached by 2030.
A more robust growth trajectory in Asian economies, predominantly India and China, has the potential to provide further impetus to oil demand growth in 2024 and 2025, according to OPEC+.
Both China and India are projected to grow this year at 5% and 7.5% respectively compared with 2.5% for the United States. That is why the bulk of demand growth will come from China-Led Asia-Pacific region which will be the more vibrant half of the world with the highest growth rates and the lowest inflation.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert