- Wednesday, October 16, 2024
The Organization of the Petroleum Exporting Countries (OPEC) has released its monthly report, forecasting a stable growth in global oil demand. According to the report, the demand for oil is expected to grow by 2.2 million barrels a day (mbd) in 2024, remaining unchanged from the previous projection. The growth is anticipated to slightly decline to 1.8 mbd in 2025.
Factors Driving Oil Demand
OPEC attributes the anticipated growth in oil demand to various factors. Strong air-travel demand and "healthy road mobility" are expected to boost the demand for oil. This includes the use of on-road diesel and trucking, as well as increased industrial, construction, and agricultural activities in countries outside the Organization for Economic Cooperation and Development (OECD). The OECD mainly consists of wealthy, industrialized nations.
Furthermore, OPEC predicts that capacity additions and petrochemical margins in non-OECD countries, particularly China and the Middle East, will contribute significantly to the growth in oil demand.
Supply Side Outlook
On the supply side, OPEC projects that non-OPEC liquids production in 2024 will experience growth of 1.3 mbd, reaching an average of 70.4 mbd. This includes a daily increase of 50,000 barrels in processing gains.
The main drivers of this supply growth are expected to be the United States, Canada, Guyana, Brazil, Norway, and Kazakhstan. The report highlights that U.S. shale basins alone account for around 49% of the expected non-OPEC liquids supply growth. Additionally, offshore projects, primarily in Latin America, are anticipated to substantially support the overall production growth this year. However, Mexico and Angola are projected to experience the largest decline in production.
Conclusion
OPEC's forecast indicates a steady demand for oil in the coming years, with no changes to the previous projection for 2024. Increased air-travel demand, road mobility, and industrial activities are expected to drive the demand growth outside of OECD countries. On the supply side, non-OPEC countries, such as the United States and Brazil, are anticipated to contribute significantly to the production growth.
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