OPEC forecasts robust oil demand growth in early assessment for 2025

Global oil demand is expected to grow by a robust 1.85 million barrels per day in 2025 to 106.21 million bpd, the Organization of the Petroleum Exporting Countries (OPEC) has said in a surprising early assessment that left the demand growth for 2024 unchanged from its previous report in December.

The healthy spurt in global oil demand growth next year will be driven by nearly 1.7-million-bpd growth in non-OECD countries, mainly in China, the Middle East, and India, the group said in its first monthly outlook report for 2024. In the current year, OPEC expected global oil demand to rise by 2.2 million bpd compared to 2023, unchanged from the group’s forecast last month.

Offering more transparency

Based on usual practice, OPEC was expected to release the outlook for 2025 in the second half of 2024. The outlook for 2024 was released in November last year. Explaining the rationale this year, OPEC said: “Bringing forward the publication of the 2025 forecast to the January 2024 MOMR issue is part of the continued commitment of the OPEC organization to offer more transparency and support for both consumers and producers.”

It said the exercise was also aimed at supporting “the continued commitment of the OPEC and non-OPEC Participating Countries in the Declaration of Cooperation (DoC) to achieve and sustain a stable oil market, and to provide long-term guidance for the market”.

Contrasting guidance

The group’s guidance for 2025 is consistent with OPEC’s forecast in World Oil Outlook 2023 that oil demand will rise to 116 mb/d by 2045, and require investment totaling $14 trillion, or around $610 billion on average per year.

But that assessment is in contrast to the International Energy Agency’s (IEA) annual World Energy Outlook in 2023, which predicted that global fossil fuel demand is set to peak by 2030. The IEA report showed global coal use entering a steep decline after 2030, while gas and oil use remained close to peak level for the next two decades.

In a thought leadership article published on the OPEC website on Wednesday, His Excellency Haitham Al Ghais, OPEC Secretary General, referenced the IEA’s report and observed: “Today, what is clear is that peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts. For instance, take 2023 and 2024. At OPEC, we see oil demand growth of 4.7 mb/d over the two years, with ESAI at over 4 mb/d too, and Rystad and Argus close to this level. Even the IEA sees growth of 3.4 mb/d over the 2023-24 period. Given these growth trends, it is a challenge to see peak oil demand by the end of the decade, a mere six years away.”

Oil prices gain

OPEC’s strong growth forecast for both 2024 and 2025 helped drive fresh gains for oil prices on Thursday: Brent crude futures gained 21 cents, or 0.3%, to $78.09 a barrel by early morning, while US West Texas Intermediate (WTI) crude futures rose 40 cents, or 0.6%, to $72.96.

OPEC’s January report also noted that the group’s oil production increased by 73,000 bpd in December from the preceding month to average 26.7 million bpd. This excludes the output from Angola, which left the group last month.

On the supply side, non-OPEC liquids production in 2024 is forecast to grow by 1.3 mbd to average 70.4 mbd, including 50,000 barrels a day in processing gains, OPEC said. The US, Canada, Guyana, Brazil, Norway and Kazakhstan are expected to be the main drivers, the report added.