In its latest monthly oil market report, OPEC has revised its global oil demand growth projections downward for the fifth consecutive time, reflecting a cautious outlook on energy markets as economic and geopolitical challenges persist. The group reduced its 2025 demand growth estimate by 90,000 barrels per day (b/d) to 1.45 million b/d, citing weaker expectations for the Middle East.
This marks a significant shift from the previous year when OPEC anticipated a robust 1.85 million b/d growth in 2025. The group also trimmed its 2024 demand growth forecast by 210,000 b/d to 1.61 million b/d, pointing to slower-than-expected growth in the Middle East, India, and the Americas. Just five months ago, OPEC had projected a more resilient 2.25 million b/d increase for this year.
The revisions bring OPEC’s projections closer to the more conservative estimates of other major forecasters. For instance, the International Energy Agency (IEA) predicts oil demand growth of 920,000 b/d in 2024 and 990,000 b/d in 2025, while the U.S. Energy Information Administration (EIA) forecasts growth of 890,000 b/d and 1.29 million b/d for the same periods.
Despite the lowered demand outlook, OPEC has maintained its forecast for non-OPEC+ liquids supply growth in 2025 at 1.11 million b/d. For 2024, the group slightly increased its estimate to 1.28 million b/d, citing stronger-than-expected production in the United States.
On the production front, OPEC+ crude oil output, which includes contributions from non-OPEC countries like Mexico, rose by 323,000 b/d in November to 40.665 million b/d, according to secondary sources such as Argus. The “call on OPEC+ crude” — the volume the group expects to supply to meet global demand — remains at 42.4 million b/d for this year and 42.7 million b/d for next year.
To stabilize the market, OPEC+ recently agreed to delay the rollback of voluntary production cuts totaling 2.2 million b/d. Originally scheduled to end in January 2025, the cuts will now be extended until April 2025, with a phased return to full production stretched over 18 months instead of one year.
A Cautious Approach to a Volatile market
These strategic decisions underscore OPEC’s careful maneuvering in an unstable energy market characterized by fluctuating demand, supply pressures, and shifting economic conditions.
The revised forecasts highlight mounting challenges for the oil market as 2024 approaches, amid energy transitions, geopolitical tensions, and uneven post-pandemic recovery. Signs of economic slowdown in major markets like the United States and China are rippling through energy markets, putting downward pressure on prices. OPEC has now reduced its demand growth forecast for oil for the fourth consecutive month, reflecting subdued industrial activity and tepid consumer demand in these key economies.
The strengthening U.S. dollar has compounded the downturn. As the dollar gains, oil becomes more expensive for buyers using other currencies, dampening global demand. This dynamic has historically restrained oil prices, particularly during periods of dollar dominance.
Non-OPEC producers are poised to increase output, exacerbating oversupply issues. Analysts at Goldman Sachs and Citibank have suggested oil prices could fall to $60 per barrel or lower if the oversupply persists, highlighting a growing imbalance between global supply and demand.
Broader Implications for Energy Markets
Should current trends persist, industry experts warn that oil prices could dip to $40 per barrel, especially if OPEC+ eases production restrictions. Such a scenario would deepen fiscal challenges for oil-exporting economies, many of which are already grappling with financial pressures.
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