OPEC Revises Economic Forecast for 2024
OPEC’s earlier projections for oil demand growth—2.2 million barrels per day this year and 1.8 million barrels per day in 2025—remain unchanged.
As a result of declining inflation and expected interest-rate reduction, OPEC increased its economic prediction for this year but maintained its estimates for global oil-demand growth.
In light of declining inflation and expected interest-rate reduction, the Organization of the Petroleum Exporting Countries maintained its predictions for the rise of global oil consumption but increased its economic forecast for this year.
In its monthly report, the Vienna-based cartel maintained its prior predictions of a 2.2 million barrels per day increase in oil demand for this year and a 1.8 million barrels per day increase for 2025.
With the help of robust growth dynamics in the United States, China, and India, the organization increased its global economic-growth prediction for this year to 2.8% from 2.7%. Next year’s economic growth prediction of 2.9% was not altered.
Opec stated on Tuesday that they expect overall inflation to continue falling throughout 2024 and into 2025, which lends credence to the forecast of a positive, sustained dynamic across major economies. It is expected that this will result in higher levels of real income and better purchasing power for consumers.
The cartel predicts that central banks will begin reducing interest rates in the second half of this year and continue doing so throughout 2025.
U.S. economic growth predictions for this year were lifted by OPEC to 1.9% from 1.6% and for 2025 they remained unchanged at 1.7%. The growth forecast for the Eurozone is set at 0.5% this year and 1.2% next year, without change.
As OPEC+ extends output curbs, geopolitical risks in the Middle East persist, and worries about slowing Chinese demand and the trajectory of U.S. interest-rate cuts dampen gains in physical markets, the cartel releases its latest report and crude futures remain trapped in a tight trading range.
The international benchmark for crude oil prices, Brent, is trading at about $82 per barrel, while the U.S. oil gauge, WTI, is trading at about $78 per barrel.
As a result of increased production in Libya and Nigeria, OPEC managed to increase its crude oil output in February, despite ongoing cuts by Saudi Arabia and other members. Citing secondary sources, it stated that the cartel’s crude-oil production increased by 203,000 bpd to 26.57 mb/d from January levels.
There was a 144,000 bpd increase in Libyan oil output to 1.17 mbd, and a 47,000 bpd increase in Nigerian oil production to 1.48 mbd. Daily oil production in Saudi Arabia increased by 18,000 barrels, reaching 8.98 million barrels.
In a move to prevent a worldwide surplus and maintain prices, OPEC and its allies have decided to prolong the voluntary production restrictions of about 2.2 million barrels per day into the second quarter of the year. Policy decisions about the second half of the year are anticipated to be made at a ministerial meeting in June.
Noting that Russia and Mexico are projected to see the biggest drops in supply growth, the organization reduced its non-OPEC production growth prediction for 2024 from 1.2 million barrels per day to 1.1 million barrels per day. Instead, the growth prediction for 2025 was revised upwards, from 1.3 million barrels per day to 1.4 million barrels per day.
On Thursday, the monthly report from the International Energy Agency is scheduled to be released.
