In its latest assessment of the global oil market, OPEC maintains a steady perspective on oil demand growth while adjusting its forecast for non-OPEC supply. The Vienna-based cartel, in its monthly report, continues to project a growth in oil demand of 2.2 million barrels per day in 2024 and 1.8 million barrels per day in 2025. However, a notable revision comes in the form of reduced expectations for non-OPEC supply growth. The forecast for 2024 has been trimmed from 1.1 million to 1 million barrels per day, with the U.S., Canada, Brazil, and Norway being primary contributors to this growth. For 2025, the growth expectation is adjusted down to 1.3 million barrels per day from the previously projected 1.4 million.
The report's release coincided with a spike in crude oil prices, driven by escalating tensions in the Middle East and Eastern Europe, as well as concerns over tighter supplies in the coming months. Brent crude is trading around $90 per barrel, while West Texas Intermediate (WTI) hovers around $86. Market sentiments remain volatile, influenced by regional conflicts and economic indicators that impact global supply and demand dynamics.
Market Overview:
-OPEC maintains its forecast for global oil demand growth in 2024 and 2025 at 2.2 million barrels per day (mbpd) and 1.8 mbpd, respectively.
-The cartel revises its non-OPEC supply growth forecast downward for both 2024 (1 mbpd) and 2025 (1.3 mbpd).
Key Points:
-OPEC cites the U.S., Canada, Brazil, and Norway as key drivers of non-OPEC supply growth.
-The revision comes amid high oil prices fueled by geopolitical tensions and tight supply concerns.
-OPEC raises its U.S. economic growth forecast for 2024, potentially bolstering demand.
Looking Ahead:
-OPEC's report strengthens the case for a "sound and sustainable market balance" in the coming months.
-The next OPEC+ meeting on June 1st will determine the future of production cuts, with a potential rollback expected in the second half of 2024.
-The International Energy Agency's oil market report on Friday may offer a contrasting perspective on global demand.
OPEC’s report also includes updated economic growth forecasts, with the U.S. growth estimate for 2024 revised up to 2.1% from 1.9%, and the global growth forecast holding steady at 2.8% for the current year and 2.9% for 2025. Eurozone growth projections remain unchanged. Notably, OPEC's crude oil production in March saw a marginal increase, driven primarily by Iran, Saudi Arabia, Gabon, and Kuwait. However, Nigeria experienced a decline in production.
Amid these developments, OPEC+ reaffirmed its commitment to current output policies in its recent Joint Ministerial Monitoring Committee meeting, highlighting efforts by Iraq and Kazakhstan to meet production targets and Russia’s announcement of second-quarter cuts based on production rather than exports. OPEC+ members are scheduled to meet again on June 1 to discuss future policies, with market watchers anticipating a gradual rollback of output cuts in the second half of the year. This strategic approach reflects OPEC's ongoing efforts to maintain market stability amid fluctuating global demand and supply scenarios.
