© Reuters. FILE PHOTO: The logo of the Organization of the Petroleoum Exporting Countries (OPEC) is seen outside of OPEC’s headquarters in Vienna, Austria April 9, 2020. REUTERS/Leonhard Foeger//File Photo
By Alex Lawler
LONDON (Reuters) -OPEC on Wednesday stuck to its forecast for relatively strong growth in global oil demand in 2024 and said 2025 will see a robust increase in oil use, led by China and the Middle East, in a surprise early prediction.
The 2025 forecast is in line with the Organization of the Petroleum Exporting Countries’ view oil use will keep rising for the next two decades, in contrast to bodies such as the International Energy Agency, which predicts it will peak by 2030 as the world shifts to cleaner energy.
OPEC, in a monthly report, said world oil demand will rise by 1.85 million barrels per day in 2025 to 106.21 million bpd. For 2024, OPEC saw demand growth of 2.25 million bpd, unchanged from last month.
Oil prices, though, have started the year on a weak footing as uncertainty in the market about demand has offset the impact of a new round of supply cuts by OPEC and its allies, known as OPEC+. on Wednesday was trading around $77 a barrel, down almost 2%. [O/R]
The 2025 forecast was published on the same day as OPEC Secretary General Haitham Al Ghais published an article disputing that oil demand was near a peak, and reiterated the group’s call for continued oil industry investment.
“What is clear is that peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts,” he wrote. “It is a challenge to see peak oil demand by the end of the decade, a mere six years away.”
The 2025 prediction is OPEC’s first in its monthly report and would have been expected in July 2024 based on previous practice. OPEC said it had published the forecast earlier than usual to provide long-term guidance for the market.
“The undertaking to reach beyond the previously established time horizon of short-term forecasting serves to support the understanding of market dynamics,” OPEC said in the report.
DIFFERENCE ON 2024
In 2025, OPEC anticipates an increase in global economic growth to 2.8% from 2.6% this year in part because of interest rate cuts. China, the Middle East and India will drive the increase in oil consumption, OPEC said.
For this year, OPEC’s expectation of oil demand growth is much more than the expansion of 1.1 million bpd so far forecast by the IEA. The IEA, which represents industrialised countries, is scheduled to update its forecasts on Thursday.
According to the IEA, global oil demand growth will halve in 2024 as a result of below-trend economic growth in major economies, efficiency improvements and a booming electric vehicle fleet.
Apart from their differing views on demand, OPEC and the IEA have also clashed on the need for investment in new oil supply. The IEA says the end of the growth era for fossil fuels undercuts the rationale for increased investment.
OPEC and the wider OPEC+ alliance have implemented a series of output cuts since late 2022 to support the market. A new cut for the first quarter took effect this month.
But the report noted OPEC oil production rose slightly in December, by 73,000 bpd to 26.70 million bpd, led by Nigeria, one of the members that has been recovering from internal challenges that limited output.
OPEC adjusted its production figures lower to reflect the exit from the group of Angola, announced by Luanda last month and said that, as of December, its crude output amounted to 26.5% of the world oil market.
Its market share has declined from 33% in 2017, according to Reuters calculations based on OPEC figures, as a result of successive output cuts and the exit of some members, despite a few other small producers joining.
Still, OPEC delegates have downplayed the issue of market share, citing the group’s view that non-OPEC supply growth will slow and members’ market share will recover over time.
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