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Opec stands by predictions for oil demand growth

Highway traffic in California. Opec said the upcoming 'driving season' in the US will provide the usual additional demand for fuel Alamy/Radek Hofman via Reuters
Highway traffic in California. Opec said the upcoming 'driving season' in the US will provide the usual additional demand for fuel
  • Robust summer demand expected
  • Wide split between forecasts
  • Output cut decision in June

Opec predicts robust fuel use this summer and has stuck to last month’s forecast of relatively strong growth in oil demand in 2024 and 2025.

The oil producers’ organisation predicted in its monthly report that global demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025.

A boost to economic growth could give extra tailwind to oil prices, which have rallied above $90 a barrel this year because of tighter supply and war in the Middle East.

Opec and its allies, known as Opec+, agreed last week to keep oil output cuts in place until the end of June.

“Despite some downside risks, the continuation of the momentum seen in the beginning of the year could result in further upside potential for global economic growth in 2024,” Opec said in the report.

In the summer, when fuel demand rises seasonally as people travel more, Opec said demand for kerosene, which is used in jets, will rise by 600,000 bpd year on year in the second quarter, gasoline by 400,000 bpd and diesel by 200,000 bpd.

Opec said the US economy would give the traditional summer boost to fuel demand.

“The upcoming driving season in the US is expected to provide the usual additional demand for transportation fuels,” Opec said.

After last week’s meeting of a panel of Opec+ ministers, the full group will meet in June to decide whether to extend output cuts further or return some supply to the market.

There is a wider than usual split between various forecasters on the strength of oil demand growth in 2024, partly due to differences over the pace of the world’s transition to cleaner fuels.

This week the energy trader Vitol said demand will rise by 1.9 million bpd in 2024, not far from Opec’s view, while the US government cut its growth prediction to 950,000 bpd.

The International Energy Agency, which represents industrialised countries, and which forecasts that oil demand will peak by 2030, also trimmed its forecast for 2024 oil demand growth on Friday, citing lower than expected consumption in OECD countries and a slump in factory activity.

The Paris-based energy watchdog lowered its growth outlook for this year by 130,000 bpd to 1.2 million bpd, adding that the release of pent-up demand by China after easing Covid-19 curbs had run its course.

Opec believes oil use will keep rising for the next two decades. It has not forecast a peak.

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