OPEC, the Organisation of Petroleum Exporting Countries, has trimmed growth in crude oil demand forecasts for 2024 and 2025, which has gone down as the sharpest reduction in the outlook for 2024. It also marked the growth cut forecast for the fifth consecutive month, according to reports.
The trimming of growth forecasts which does not augur well for economic growth had cut demand projection by a range that hovers between 210,000 barrels a day and 1.6 million barrels a day. This data has been revealed in the monthly report of OPEC. The cuts in the months following July has now amounted to a reduction by 27%.
Resumption of halted production paused
The cuts in demand forecast has been so deep that last week Saudi Arabia and Russia, which leads the OPEC+ alliance agreed for the third time this year pause plans to resume crude production which was halted earlier. They also agreed that when they agree to resume halted production in 2025, they will increase the pace of growth of the resumed production. This is entire due to a dim view of the demand rising around the world.
The secretariat of the OPEC, which is based in Austria’s capital Vienna, mentioned that the revision in demand forecast takes “into account recently received bearish data” for the third quarter,” and “downward revisions to OECD Americas and OECD Asia Pacific.” This agreement has led to a postponement of the scheduled hikes in crude oil production from January 2025 to April 2025.
A blessing for India
Quite naturally, the cut in demand production has led to declining oil prices, which has been a sort of blessing for India, which is clocking a fairly impressive rate of economic growth. Oil prices have gone down 17% since the early days of July. Brent futures are near $73 a barrel – a rate that is considered too low for Saudi Arabia and other OPEC+ coalition. Since India is critically dependent on imported crude — it imports more than 80% of its annual requirement — the country is immensely benefitted if crude prices remain low.
Some MNCs have a dimmer view
Incidentally, the growth projections for 2024 of OPEC are far higher than that done by other organisations such as Morgan Stanley and Goldman Sachs. It is also above the figures of International Energy Agency in Paris.
According to OPEC, oil consumption will average 103.82 million barrels a day in 2024. The growth estimates for 2025 has gone down by 90,000 barrels/day to 1.4 million barrels/day. Reports have stated that since 2022 OPEC+ has been withholding crude oil production to ward off a possibility of building a surplus and keep prices up.
The demand for crude is a crucial indicator all over the world since it indicates the level of economic activity which is still heavily dependent on consumption of petro-fuels. Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
