The Organization of the Petroleum Exporting Countries (OPEC) has lowered its forecast for global oil demand growth in 2024, citing a slower-than-expected economic recovery in China, the world’s second-largest oil consumer.
The cut in the forecast comes as a surprise to the market, which had been expecting OPEC to maintain its previous estimate.
In its latest monthly oil market report, OPEC expects global oil demand to grow by 2.2 million barrels per day (bpd) in 2024, down from its previous forecast of 2.4 million bpd. The revision is primarily due to weaker-than-expected economic growth in China, a significant driver of global oil demand.
China’s economy has been struggling to recover from the COVID-19 pandemic and facing a number of headwinds, including a property crisis and rising unemployment. As a result, China’s oil demand has been weaker than expected, which has had a knock-on effect on global oil demand.
OPEC’s decision to cut its oil demand growth forecast is a sign that the cartel is concerned about the outlook for the global economy. If the global economy weakens, it could lower oil demand and prices. This would be a negative for OPEC member countries, which rely on oil revenues for their economies.
The cut in the oil demand growth forecast is also likely to have a significant impact on oil prices. If OPEC is expecting lower oil demand, it may decide to cut production to prevent a glut of oil in the market, potentially leading to higher oil prices.
However, it is essential to note that OPEC’s oil demand forecasts are only sometimes accurate. The cartel has been known to overestimate or underestimate oil demand. Therefore, it is possible that OPEC’s latest forecast is too pessimistic and that global oil demand will be higher than the cartel expects.
Overall, OPEC’s decision to cut its oil demand growth forecast is a significant move that reflects the cartel’s concerns about the global economy. While the cut will likely affect oil prices, it’s important to remember that OPEC’s forecasts are not always accurate.
