OPEC lowers forecast for world oil demand growth
China signals lower fuel consumption, prompting OPEC to cut its forecast for global oil demand growth for the first time this year.
On August 12, the Organization of the Petroleum Exporting Countries (OPEC) released its monthly report on the world oil market. Accordingly, the world is expected to consume 104.3 million barrels of oil per day this year, up 2.11 million compared to last year. This is lower than the forecast of 2.25 million barrels last month.
This is the first time since July 2023 that the organization has lowered its demand growth forecast. This comes after China signaled weaker-than-expected consumption, especially of diesel. The real estate crisis is also holding back the world's second-largest economy.
"We made the adjustment after receiving actual data from the first two quarters of the year, as well as forecasting weaker oil demand in China," OPEC explained.
A crude oil storage facility of China National Offshore Oil Corporation (CNOOC) in Zhanjiang. Photo: Reuters
Still, this year’s fuel consumption increase is about 1.4 million barrels a day above the pre-pandemic average, and OPEC expects summer travel demand to remain strong.
The organization's report helped world crude oil prices increase sharply in the session of August 12. Brent oil increased by 3% to 82 USD per barrel. WTI oil increased by 4% to 80 USD.
Since late 2022, OPEC and its allies have implemented a series of production cuts to prop up prices. Most of the cuts are in effect until the end of 2025.
On August 1, the organization confirmed its plan to gradually increase production from October, after the agreement to cut 2.2 million barrels a day expired. However, the decision to lower the growth forecast this time will make OPEC reconsider the plan.
In fact, OPEC+ pumped 40.9 million barrels a day into the market in July, up 117,000 barrels from June. The country that increased production the most was Saudi Arabia.
In yesterday's report, OPEC also lowered its demand growth forecast for next year, to 1.78 million barrels a day, from its previous forecast of 1.85 million.