OPEC Raises 2023 Oil Demand Forecast Despite Headwinds

On July 13th, the Organization of the Petroleum Exporting Countries (OPEC) released its monthly report on the state of the oil market. The report revealed that OPEC had raised its projection for oil demand growth in 2023 and anticipated a minor slowdown in 2024. Despite the economic challenges faced by many countries, China and India are driving the expansion in fuel use, leading to an expected rise in world oil demand by 2.25 million barrels per day in 2024, which represents a growth of 2.2 percent from the year 2023.

This growth is of utmost importance to OPEC and its allies, collectively known as OPEC+, as it plays a significant role in making policy decisions. In June, the group extended supply curbs into 2024 to maintain market stability. OPEC anticipates that this year's solid oil market fundamentals will extend into 2024 due to solid global economic growth and continued improvements in China, increasing oil consumption.

Recent reports have indicated that OPEC has revised its 2023 demand growth forecast, increasing it by 90,000 barrels per day compared to last month's projection. This new estimate is based on the expected world economic growth rate of 2.5 percent next year, which is anticipated to drive increased demand for oil.

Furthermore, OPEC's prediction for 2024 suggests that there will be a higher demand for oil than the supply produced by non-OPEC countries. Consequently, OPEC projected a global requirement of 30.2 million barrels per day in 2024 to balance the market, which is an 800,000-barrel-per-day increase from the previous year.

In terms of production, OPEC observed a rise of 91,000 barrels per day. This increase in production is mainly attributed to Iran and Iraq. Looking ahead, the US is expected to make the most significant contribution to non-OPEC supply expansion next year. However, OPEC predicts that US tight oil growth will slow down to 500,000 barrels per day in 2024 from 730,000 barrels per day in 2023.

According to Procurement Resource, OPEC has raised its projections for oil demand growth in 2023, anticipating a further increase. Despite economic challenges, OPEC predicts a rise in demand growth for 2024, with an expected rise of 2.25 million barrels per day. OPEC has also expected that demand growth for 2023 will rise by 90000 barrels per day from the projection made in June 2023.