global oil demand will increase by 2.25 million b/d in 2024 after an increase of 2.4 million b/d in 2023

Yesterday’s monthly OPEC oil market report confirmed the organization’s previous forecasts for growth in demand for hydrocarbons in 2023-2024 against the backdrop of better-than-expected growth rates in many of the world’s economies and despite rising rates from central banks struggling with high inflation. Moreover, the Organization of Oil Exporters admits that “surprises can be expected” from the developing countries of Asia, Brazil and Russia in terms of accelerating economic growth, and the US economy is also showing positive dynamics that may exceed expectations. According to the organization’s July estimates, global oil demand will increase by 2.25 million barrels per day (b/d) in 2024, after an increase of 2.4 million b/d in 2023. As OPEC notes, demand continues and will continue to be supported by the exit of the Chinese economy from the regime of covid restrictions. As a result, the pre-pandemic level of oil consumption will be exceeded this year and will reach 102.1 million bpd, the report says.

Supply will expand slower than demand. Thus, the estimate for the growth of oil production by non-OPEC countries for 2023 was increased slightly – to 67.4 million bpd (from 67.3 million), for 2024 it was increased more – by 1.4 million bpd, to 58.8 million b/d The OPEC countries themselves, which are part of the OPEC+ agreement, have strengthened voluntary restrictions on oil supplies to balance the world market – from October 2022, a production reduction of 1.27 million bpd has been agreed upon, to 25.4 million bpd. In August, real production by these countries amounted to 22.6 million b/d, which is 2.8 million b/d below the agreed level, although the total production of the cartel countries this month increased by 113 thousand b/d, to 27.45 million bpd – due to a recovery increase in production in Iran (not included in the supply limitation agreement) and Nigeria. As a result, the price of a barrel of Brent exceeded $90 last week – this happened after additional restrictions on supplies by Russia and Saudi Arabia, agreed upon in early September – and yesterday exceeded $92 for the first time since November 2022.

Oil production in Russia at the end of July 2023 remained at the level of June and amounted to 9.5 million b/d; for 2023, in general, OPEC’s estimate was increased by 70 thousand b/d, to 10.5 million b/d. Since August, the Russian Federation has also been reducing oil exports (by 500 thousand b/d); from September to December the reduction will amount to 300 thousand b/d.

Oleg Sapozhkov