The slowdown of the global economy and especially of China have forced OPEC to revise downwards the growth forecasts of the oil demand for the current year, just a few days after postponing the expected production increase. A scenario that prices have been discounting for some time, even if in recent days prices have accelerated downwards and have returned below 70 dollars a barrel.
The new (more pessimistic) forecasts
The cartel of crude oil producers has revised downwards global oil demand growth for 2024, indicating it will 2.03 million barrels per day compared to the 2.11 million barrels per day previously forecast. Also for 2025 there has been a very slight downward revision in growth forecasts, which will stand at 1.74 million barrels per day from the 1.78 mbd previously indicated.
It’s China’s fault that it’s slowing down
Much of the downward revision was driven by the Chinawhose economy is slowing downincluding the manufacturing sector, as evidenced by the latest PMI data. In the major Asian economy, demand growth is now expected to stand at 650 thousand barrels per day in 2024, down from the previous estimate of 700,000 barrels per day.
OPEC has reminded that the Chinese economy is struggling with economic challengesespecially with the difficulties in the real estate sector. Even the shift towards cleaner energy sources is impacting the demand for crude oil – the cartel explained – The growing use of LNG trucks and electric vehicles, in fact, could reduce the demand for diesel and gasoline.
The postponement of the production increase
Last week he met OPEC+the expanded formation of the cartel that includes OPEC producers and some external members, such as Russia. Delegates took the difficult decision to delay the production increase by two months of oil that was expected in October.
A plan to increase production was supposed to start next month, from an initial increase of 180 thousand barrels to return to the market 2.2 million barrels per day in the following months. The program will instead start in December and continue until November of next year. A cut of 2.2 million barrels per day was undertaken by Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the United Arab Emirates as a voluntary action and therefore does not fall within the official policy binding for all members of the OPEC + coalition.
Crude oil prices
The petrolium it has now also gone down below $70 a barrel. The October futures on U.S. Light Crude (or WTI) are trading at $66.42 a barrel, while the further November contract on Brent is at $69.95 a barrel. These are the lows of the year and prices not seen since March 2023.
