Global oil demand to increase in 2024 – OPEC

Tom Brown


LONDON (ICIS)–Total global oil demand is set to increase in 2024 after surpassing pre COVID-19 levels this year, with the bulk of consumption growth expected to come from China, India and the Middle East, OPEC said on Tuesday.

Total consumption is expected to hit 104.3m bbl/day next year from 102.1m bbl/day, the cartel said, with the pace of growth slowing slightly to 2.2m bbl/day compared to a projected 2.4m bbl/day this year.

The vast bulk of this demand is expected to come from Pacific and southern Asia along with the Middle East, set to comprise around 2m bbl/day of the total, with the remainder to come from the OECD, particularly OECD Americas.

The 2024 consumption estimate represents a sharp break from forecasts by the International Energy Agency (IEA) last month, which projected 2024 growth of less than half OPEC’s current outlook, at 1m bbl/day.

“With the post-pandemic recovery having largely run its course and as the energy transition gathers pace, growth will slow… in 2024,” the IEA said in its monthly oil market report last month. The latest projections from the IEA will be released on Wednesday.

OPEC’s projections are based on expectations that industrial demand will start to improve towards the end of 2023 after lagging services through the year, as well as the recovery in tourism, air travel and motor transport consumption.

Global crude demand hit a record high of 103m bbl/day in July during the peak northern hemisphere travel season, and may have climbed even high in August.

Crude demand has also risen strongly in China, increasing 31% year on year and 21% month on month in August on the back of stronger demand from refiners as the country’s economy gradually rebounds after exiting lockdown at the start of 2023.

This is also due in part to inventory-building, according to ICIS oil analyst David Jorbenaze, which means that the upswing may not signify as much organic demand momentum as the headline numbers may indicate.

“Imports were high, but not all the barrels being imported went into processing. A lot of it went into storage,” Jorbenaze said this week.

“So Chinese storage and inventories are high. So if they need to, they can comfortably resort to the storage barrels because I think they will shy away from high oil prices,” he added.

This month has also seen OPEC+ members Saudi Arabia and Russia signal plans to continue with voluntary production cuts totalling 1.3m bbl/day through the rest of the year, sending crude prices to the highest levels seen this year.

After breaking the $90/bbl mark last week, Brent crude futures have continued to firm, hitting $91.32/bbl in early Tuesday trading, buoyed also by expectations of stronger draws on US inventories this week.

Despite the uptick in pricing, many analysts have held back on sharp revisions to immediate price expectations, with banking group ING sticking to its forecast of $92/bbl pricing during the fourth quarter, due to expectations that China’s demand rally may be limited.

The resilience of China demand and the impact of the latest Saudi-Russia cut plans are the key factors in the market for the quarter, according to Jorbenaze.

“Supply and China demand are the two colliding factors right now, and that’s what will drive the price in Q4,” he said.

While leaving 2023 global crude demand forecasts unchanged at 2.4m bbl/day, OPEC upped non-OPEC supply projections slightly to 1.6m bbl/day, driven by volumes from the US, Brazil, Norway, Kazakhstan, Guyana and China.

Thumbnail image shows traffic in the Netherlands. Road transportation is expected to be one of the key factors in oil demand next year, according to OPEC (image credit: Hollandse Hoogte/Shutterstock)


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