OPEC lowers forecast for oil demand growth again

The Organization of the Petroleum Exporting Countries (OPEC) has downgraded its forecasts for oil demand growth for this year and the next for the fifth consecutive time. According to its latest monthly report, it has lowered the expectations for 2024 by 210,000 barrels per day to 1.6 million barrels, representing the deepest reduction so far. Since July, the consumption forecast has dropped by 27%, as the organization now increasingly takes into account the deteriorating market situation. Last week, the Saudi Arabia and Russia-led OPEC+ alliance agreed to delay the resumption of suspended crude production for the third time. The increases planned for January will now take place starting in April. Since July, oil prices have dropped by 17% due to China's economic slowdown and increased supply from the Americas. Brent futures are currently traded around 73 dollars per barrel, a level insufficient for the Saudis and many other members to cover government expenditures. Despite numerous downgrades, OPEC's forecasts still remain significantly above those of the rest of the oil industry and deviate markedly from this year's actual consumption data. The alliance's growth projections for 2024 are roughly twice as high as those of Morgan Stanley and the Goldman Sachs Group, and significantly above the estimates of the International Energy Agency (IEA) and Saudi Aramco. OPEC assumes that oil consumption this year will average 103.82 million barrels per day and has lowered the growth forecast for 2025 by 90,000 barrels to 1.4 million barrels per day. This inaccuracy in estimating this year's oil demand raises further doubts about OPEC's long-term expectation that oil consumption will continue to rise until mid-century — a view only held by a minority within the oil industry. With last week's decision, OPEC+ plans to gradually ramp up the production of 2.2 million barrels per day, which has been withheld since 2022, between April and the end of 2026.