OPEC on Wednesday reaffirmed its projections for strong global oil demand growth in 2024, while also unveiling a surprise early prediction for robust oil use in 2025. The forecast suggests that oil consumption will continue to rise for the next two decades, in contrast to predictions by other organizations such as the International Energy Agency (IEA), which expects demand to peak by 2030 as the world transitions to cleaner energy.
According to OPEC’s monthly report, the organization anticipates that global oil demand will increase by 1.85 million barrels per day (bpd) in 2025, reaching 106.21 million bpd. This forecast aligns with OPEC’s long-term view of rising oil use. The report also maintained the previous month’s estimate of 2.25 million bpd demand growth for 2024.
However, despite the positive outlook for oil demand, oil prices have experienced a weak start to the year due to market uncertainty surrounding demand, which has offset the impact of recent supply cuts implemented by OPEC and its allies under the OPEC+ agreement. As a result, Brent crude prices have dropped nearly 2% and are currently trading around $77 per barrel.
In an article published on the same day, OPEC Secretary General Haitham Al Ghais disputed claims that oil demand is close to peaking. He emphasized the need for continued investment in the oil industry, stating, What is clear is that peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts. Ghais argued that it is unlikely that peak oil demand will occur by the end of this decade, just six years away.
This early release of the 2025 forecast in OPEC’s monthly report provides long-term guidance for the market and aims to support an understanding of market dynamics. OPEC’s projection for 2025 is influenced by expectations of increased global economic growth of 2.8%, up from 2.6% in the current year. China, the Middle East, and India are expected to drive the rise in oil consumption.
It is worth noting that OPEC’s estimate for oil demand growth in 2024 differs significantly from the IEA’s forecast of a halving in growth due to below-trend economic growth, efficiency improvements, and the proliferation of electric vehicles. Furthermore, OPEC and the IEA have clashed regarding the need for investment in new oil supply. The IEA argues that the end of the fossil fuel growth era undermines the justification for increased investment.
Despite challenges to OPEC’s market share, the organization remains confident that non-OPEC supply growth will decelerate, allowing its members’ market share to recover over time. In December, OPEC’s oil production increased slightly by 73,000 bpd to 26.70 million bpd, led by Nigeria’s recovery from internal challenges that previously limited its output.
As oil prices face uncertainty and OPEC’s projections indicate continued robust demand growth, the market awaits updates from the IEA on its forecasts. The divergence in outlooks between OPEC and the IEA underscores the differing perspectives on the future of global oil demand.
