Opec has revised down its forecast for oil demand growth this year based on data from China, India and other regions, while also lowering its estimate for 2025, marking the producer group’s fourth consecutive downwards adjustment.
Global oil demand growth forecast for 2024 has been reduced by 107,000 barrels per day, now projected to increase by 1.8 million bpd compared to the previous year, Opec said in its monthly market report on Tuesday.
While demand in regions such as the Americas and Europe has been given an upwards revision, weaker-than-expected performance in China, India and other Asian and Eurasian regions has led to a downwards adjustment, the group said.
Despite the forecast cuts, Opec expects strong demand for transport fuel this year.
“Total world oil demand is anticipated to reach 104 million in 2024, bolstered by strong transportation fuel demand and ongoing healthy economic growth,” Opec said.
“Similarly, refinery capacity additions and petrochemical margins – mostly in China and the Middle East – are expected to contribute to oil demand growth.”
For 2025, Opec now projects oil consumption to increase by 1.5 million bpd, down 103,000 bpd from its previous forecast.
The latest data brings Opec's oil demand growth projections closer to the International Energy Agency's estimates for 2024 and 2025.
The Paris-based agency has predicted a significant slowdown in global oil demand growth, with an estimated increase of fewer than 900,000 bpd this year, and a growth of 1 million bpd in 2025.
China, the main driver of global oil demand growth in 2023, is now experiencing an economic slowdown due to a weak property market, sluggish consumer spending and a decline in manufacturing activity.
Last week, Beijing announced a 10 trillion-yuan stimulus package to support local governments, as the country braces for potential pressure from Donald Trump's re-election as US president, with threats of additional tariffs on Chinese goods.
Fitch Ratings said the latest fiscal measures, while potentially beneficial in the long term, are unlikely to spur immediate economic growth or alleviate deflationary pressures.
The ratings agency expects a larger budget deficit of 7.1 per cent of GDP in 2024, compared to the previous year’s 5.8 per cent.
China’s slowdown has weighed on oil prices this year, with Brent, the international benchmark, falling about 21 per cent since hitting a high of $91 a barrel in April, despite production cuts and geopolitical tensions stemming from the Middle East.
This month, eight Opec+ member countries agreed to extend voluntary production adjustments of 2.2 million bpd for a month until the end of December.
Opec’s crude output rose 466,000 bpd month-on-month to 26.53 million bpd in October, mainly on increased production in Libya, Nigeria and Democratic Republic of the Congo, the group said, citing secondary sources.
Squad
Ali Kasheif, Salim Rashid, Khalifa Al Hammadi, Khalfan Mubarak, Ali Mabkhout, Omar Abdulrahman, Mohammed Al Attas, Abdullah Ramadan, Zayed Al Ameri (Al Jazira), Mohammed Al Shamsi, Hamdan Al Kamali, Mohammed Barghash, Khalil Al Hammadi (Al Wahda), Khalid Essa, Mohammed Shaker, Ahmed Barman, Bandar Al Ahbabi (Al Ain), Al Hassan Saleh, Majid Suroor (Sharjah) Walid Abbas, Ahmed Khalil (Shabab Al Ahli), Tariq Ahmed, Jasim Yaqoub (Al Nasr), Ali Saleh, Ali Salmeen (Al Wasl), Hassan Al Muharami (Baniyas)
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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TUESDAY'S ORDER OF PLAY
Centre Court
Starting at 2pm:
Malin Cilic (CRO) v Benoit Paire (FRA) [8]
Not before 4pm:
Dan Evans (GBR) v Fabio Fogini (ITA) [4]
Not before 7pm:
Pablo Carreno Busta (SPA) v Stefanos Tsitsipas (GRE) [2]
Roberto Bautista Agut (SPA) [5] v Jan-Lennard Struff (GER)
Court One
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Prajnesh Gunneswaran (IND) v Dennis Novak (AUT)
Joao Sousa (POR) v Filip Krajinovic (SRB)
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Rajeev Ram (USA) and Joe Salisbury (GBR) [1] v Marin Cilic v Novak Djokovic (SRB)
Nikoloz Basilashvili v Ricardas Berankis (LTU)
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
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COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
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