OPEC sticks to oil demand view, cuts non-OPEC supply growth forecast
Summary
The Organization of the Petroleum Exporting Countries left its estimates for global oil-demand growth unchanged, but lowered its forecast for non-OPEC supply growth for this year and next.
The Organization of the Petroleum Exporting Countries left its estimates for global oil-demand growth unchanged, but lowered its forecast for non-OPEC supply growth for this year and next.
The Vienna-based cartel said in its monthly report that it continues to expect oil demand to grow by 2.2 million barrels a day this year and by 1.8 million barrels a day in 2025, unchanged from its previous estimates.
The group cut its non-OPEC supply growth forecast to 1 million barrels a day for 2024 from 1.1 million barrels a day previously, saying the main drivers of growth are expected to be the U.S., Canada, Brazil and Norway. Growth expectations for 2025 were also revised down to 1.3 million barrels a day from 1.4 million barrels a day in the previous month’s forecast.
The cartel’s latest report comes after crude futures surged to their highest levels since October last week, with bullish sentiment driven by escalating hostilities in the Middle East and Eastern Europe, as well as prospects of tighter supply in the coming months.
Brent crude, the international benchmark, currently trades around $90 a barrel, while WTI, the U.S. oil gauge, is at around $86 a barrel. Fears that the Israel-Hamas war could spill over into a broader regional conflict keep providing support to prices, but gains are capped by a larger-than-expected build in U.S. inventories and another hot inflation reading scaling back expectations that the Federal Reserve will start cutting interest rates in June.
OPEC raised its U.S. economic-growth estimates to 2.1% for 2024 from 1.9% previously, and kept them at 1.7% for 2025. The global economic-growth forecast was maintained at 2.8% for the current year and 2.9% for 2025, with the eurozone growth forecast unchanged at 0.5% this year and 1.2% the next.
Driven by Iran, Saudi Arabia, Gabon and Kuwait, overall OPEC crude-oil production in March rose slightly to 26.604 million barrels a day compared with 26.601 million barrels a day in February, the cartel said, citing secondary sources.
Oil production from Iran increased by 28,000 barrels a day to 3.19 million barrels a day, while Saudi oil production rose by 20,000 barrels a day to 9.04 million barrels a day. Nigeria’s production instead fell by 38,000 barrels a day to 1.40 million barrels a day.
“The robust oil demand outlook for the summer months warrants careful market monitoring, amid ongoing uncertainties, to ensure a sound and sustainable market balance," OPEC said.
At its Joint Ministerial Monitoring Committee meeting last week, OPEC+ didn’t make any changes to their current oil output policy. The group welcomed pledges from Iraq and Kazakhstan to achieve full conformity with production targets and compensate for overproduction, as well as Russia’s announcement that its cuts in the second quarter will be based on production instead of exports. OPEC+ also said that members who oversupplied during the first quarter will present compensation plans by the end of the month.
The next meeting of the JMMC is scheduled for June 1, on the same day of the regular OPEC+ meeting, at which members are set to discuss future policy.
OPEC+ members last month agreed to extend voluntary output cuts of 2.2 million barrels per day until the end of June to support the market. Market watchers expect the group to start rolling back cuts gradually from the second half of the year.
The International Energy Agency is due to release its oil-monthly report on Friday. The Paris-based agency’s current projections are substantially lower than OPEC’s, with oil-demand growth estimated at 1.3 million barrels a day for this year.
Write to Giulia Petroni at giulia.petroni@wsj.com
