Opec optimistic about oil demand through to 2025

Pexels/Mehmet Suat Gunerli

• 106m bpd predicted for next year
• Prices up for third day
• US frees 1m barrels of petrol

Opec continues to expect strong oil demand growth this year and next as the world economy remains resilient, the group’s chief said.

“For 2024, oil demand growth is at 2.2 million barrels per day, with total global demand anticipated to average 104.5 million bpd,” Haitham Al Ghais, the secretary general of Opec, the Organisation of the Petroleum Exporting Countries, told the organisation’s economic commission board on Monday.

“The global oil demand growth forecast shows a further robust expansion of 1.8 million bpd year-on-year, averaging 106.3 million bpd in 2025,” Al Ghais said.

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The board meets twice a year, before the biannual Opec ordinary meetings, to assess the global oil market and review the main issues of the oil and energy sectors.

Opec+, led by Saudi Arabia and Russia, will convene via videoconference on June 2 to decide future output policy. It is largely expected that the alliance will roll over its 2.2 million barrel cuts until the end of the year, despite pressures from some members, such as Iraq, who would prefer a relaxation of cuts in the near future.

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Oil prices rose for a third day in a row on Tuesday, after last week’s fall, driven by concerns about the possibility that strong US economic data would keep interest rates at high levels for longer, which could curb fuel demand.

Brent traded at $83 per barrel while WTI rose 1.5 percent, trading slightly under $79 a barrel, as investors focused on the start of the peak summer driving season in the US, which generally pushes oil demand and prices up.

“Prices will likely rise due to the potential strength of demand next summer,” said Mohamed Hashad, chief market strategist at Noor Capital, a Dubai-based investment firm.

“These expectations come amid questions that concern investors in the markets as to whether the selling operations may stop soon.”

The US government announced it would free 1 million barrels of petrol from its reserves, to try to lower prices at the pump before the presidential elections in November.

Global recovery

Oil prices have fallen nearly 6 percent in the past month, but the global economy shows signs of recovery, with China reporting growth of 5 percent in the first months of the year.

The Organisation for Economic Co-operation and Development (OECD) revised upwards its economic growth forecast for the eurozone.

Geopolitical risk also seems contained: there have been no major interruptions of crude supply from the Middle East, despite the Houthi attacks in the Red Sea.

Analysts at the Wall Street bank Goldman Sachs forecast that global oil demand will grow at least until 2034 as electric vehicle sales slow.

They raised their estimates of oil demand in 2030 to 108.5 million bpd from 106 million bpd. Most of the growth will be driven by Asia, led by China and India, Goldman Sachs said.

The bank expects global oil demand to peak in 2034 at around 110 million bpd.