Opec raised its oil demand growth forecast for this year based on higher fuel consumption in China, the world’s second-largest economy and top crude importer.
Global oil demand is now projected to grow by 2.4 million barrels per day in 2023, up from a previous estimate of 2.3 million bpd, the group said in its monthly oil market report on Thursday.
“Demand is revised up on the back of strong year-on-year oil demand growth in both April and May in China. This was further supported by some improvements in oil requirements in the US and Latin America,” Opec said.
The group, which released its 2024 forecast for the first time, said it expects global crude demand next year to grow by a “healthy” 2.2 million bpd to an average 104.25 million bpd.
Oil demand in the US, the world’s largest economy, is projected to reach pre-pandemic levels, supported by a recovery in jet fuel demand and a rise in gasoline consumption, Opec said.
Fuel demand in Europe and the Asia Pacific is forecast to remain below pre-Covid levels due to slower economic activity and as continuing supply chain bottlenecks weigh on industrial production, the report said.
Crude consumption in non-organisation for economic co-operation and development, or non-OECD countries is predicted to increase by about 2 million bpd next year, with China and India recording the largest growth by country, Opec said.
“Key oil-consuming countries … along with some other developing economies in Asia, will continue their healthy growth levels and be responsible for around half of next year’s global economic growth,” the group said.
“This is under the assumptions that general inflation will continue retraction in [the second half of 2023] and 2024,” Opec said.
The oil producer’s group expects the global economy to grow by 2.5 per cent next year, down from its 2023 growth estimate of 2.6 per cent.
The world economy is set to grow at a slower pace as continued monetary policy tightening to rein in inflation is expected to crimp development, the World Bank said in its latest Global Economic Prospects report.
Growth has been forecast at 2.1 per cent this year, down from 3.1 per cent last year, before recovering to 2.4 per cent in 2024, the Washington-based lender said.
Opec expects demand for its crude this year to be higher by 100,000 bpd than its previous estimate and reach 29.4 million bpd.
Demand will rise by another 800,000 bpd in 2024 to hit 30.2 million bpd, according to the group’s initial estimates.
Non-Opec crude supply is expected to grow by 1.4 million bpd in 2024, while Opec supply is forecast to expand by 65,000 bpd to 5.51 million bpd next year.
The group's output rose by 91,000 bpd month-over-month in June to 28.19 million bpd, the report said, citing secondary sources.
Earlier this month, Saudi Arabia, the world’s largest crude exporter, said it would extend its voluntary output cut of a million barrels per day until August.
Russia will also cut its oil supplies by 500,000 bpd next month on top of the output reductions that have already been announced.
Meanwhile, the Opec+ alliance of 23 oil producing countries will keep its current production curbs in place until the end of 2024.
The group has total production curbs of 3.66 million bpd, or about 3.7 per cent of global demand, in place, including a 2 million bpd reduction agreed on last year and voluntary cuts of 1.66 million bpd announced in April.
Brent, the benchmark for two thirds of the world’s oil, was trading 0.27 per cent higher at $80.31 a barrel at 3.07pm UAE time on Thursday.
West Texas Intermediate, the gauge that tracks US crude, was up 0.17 per cent at $75.88 a barrel.