OPEC maintains its stance on oil demand
The estimates for global oil-demand growth remained unchanged, while the forecast for non-OPEC supply growth for this year and next was lowered by the Organization of the Petroleum Exporting Countries.
In its monthly report, the Vienna-based cartel stated that it maintains its expectations for oil demand to increase by 2.2 million barrels a day this year and by 1.8 million barrels a day in 2025, with no changes from its previous estimates.
The organization revised its projection for non-OPEC supply growth in 2024 to 1 million barrels a day, down from the previous estimate of 1.1 million barrels a day. The anticipated sources of this growth are predicted to be the United States, Canada, Brazil, and Norway. The growth expectations for 2025 have been adjusted downwards to 1.3 million barrels a day, compared to the previous month’s forecast of 1.4 million barrels a day.
The latest report from the cartel follows a surge in crude futures to their highest levels since October last week. Bullish sentiment has been fueled by escalating hostilities in the Middle East and Eastern Europe, along with expectations of tighter supply in the coming months.
The price of Brent crude, the international benchmark, is currently around $90 per barrel, while WTI, the U.S. oil gauge, is trading at approximately $86 per barrel. The ongoing concerns about the Israel-Hamas war potentially escalating into a wider regional conflict continue to bolster prices. However, the gains are limited by a higher-than-anticipated increase in U.S. inventories and another significant inflation reading, which has reduced expectations of the Federal Reserve initiating interest rate cuts in June.
OPEC has revised its U.S. economic growth projections, increasing the estimate for 2024 to 2.1% from the previous 1.9%, while maintaining the forecast of 1.7% for 2025. The global economic-growth forecast remains steady at 2.8% for the current year and 2.9% for 2025, while the eurozone growth forecast remains unchanged at 0.5% this year and 1.2% the following year.
According to secondary sources, OPEC reported a slight increase in crude-oil production in March, with countries like Iran, Saudi Arabia, Gabon, and Kuwait leading the way. The overall production reached 26.604 million barrels a day, up from 26.601 million barrels a day in February.
In the latest report, there has been a notable increase in oil production from Iran, reaching 3.19 million barrels a day. Similarly, Saudi Arabia also experienced a rise in oil production, reaching 9.04 million barrels a day. Nigeria experienced a decrease in production, with a daily output of 1.40 million barrels falling by 38,000 barrels.
OPEC stated that it is important to closely monitor the oil market due to the strong demand expected during the summer months. This is necessary to maintain a stable and sustainable market balance, especially considering the current uncertainties.
During its recent Joint Ministerial Monitoring Committee meeting, OPEC+ decided to maintain their existing oil output policy without making any adjustments. The group expressed satisfaction with the commitments made by Iraq and Kazakhstan to adhere to production targets and make up for any excess production. Additionally, Russia’s decision to base its cuts on production rather than exports in the second quarter was also acknowledged. In addition, OPEC+ announced that member countries that exceeded their supply quotas in the first quarter will be required to submit compensation plans by the end of the month.
The upcoming JMMC meeting is planned for June 1, coinciding with the regular OPEC+ meeting, where members will deliberate on future policy.
Last month, OPEC+ members reached an agreement to prolong voluntary output cuts of 2.2 million barrels per day until the end of June in order to provide market support. Experts in the field anticipate that the group will begin to gradually reduce cuts starting in the second half of the year.
The International Energy Agency is set to publish its oil-monthly report on Friday. The current projections of the Paris-based agency are significantly lower than those of OPEC, estimating oil-demand growth at 1.3 million barrels a day for this year.
