The head of oil producer alliance OPEC dismissed forecasts of falling crude demand in the coming year, saying there was too much pessimism – even as the group extended production cuts a day earlier to try to support prices amid sluggish global consumption.
“For OPEC, our demand growth this year is 1.9 million barrels per day,” OPEC Secretary-General Haitham Al Ghais told CNBC’s Dan Murphy at the Adipec Energy Conference in Abu Dhabi on Monday.
“Now some people may say that this number is on the high side, but other independent analysts, researchers in the market also think this number is at a similar level,” he said. “We think some people are at a very low level. We still have demand for demand. Pretty strong.”
“I think the demand outlook is a little too dour, doom and gloom in some corners of the market in terms of analysts and research, but we still believe that our data is consistent with a lot of other independents,” Arghese said.
The Vienna-based oil producer group lowered its near-term oil demand growth forecast in mid-October, predicting growth of 1.93 million barrels per day this year and 1.64 million barrels per day in 2025. Previous forecasts were 2.03 million barrels per day and 1.74 million barrels per day respectively.
Although the outlook figure has been revised down, it is still well above that of the Paris-based company International Energy Agency, Global oil demand is expected to increase by about 900,000 barrels per day this year and to nearly 1 million barrels per day by 2025.
“To be fair, we’ve reduced demand by about 100,000 to 200,000 barrels per day over the past few months,” Arghese said. “Despite that, we’re still at 1.9 million barrels, which is above the historical average and large Pre-epidemic and even post-pandemic recovery rates, that’s about 1.2 million barrels per day.”
The forecast comes amid a slowdown in China’s economy, which has hit oil demand and plentiful global supplies. China is the world’s largest crude oil importer and second largest crude oil consumer, after the United States.
Asked about concerns about China’s economic trajectory, the OPEC chief responded: “China’s production increased by 600,000 barrels this year… I think those who think China’s production increased by 0.1 (million barrels per day) or almost nothing. Any growth is an outlier, and we are not an outlier.
He added that the group was “seeing some very positive data coming out of the U.S. economy” and was seeing “good signs in the petrochemical industry, in the aviation industry.”
Many economists expect China’s economic growth to remain relatively weak in 2025, despite Beijing’s recent stimulus measures. The measures announced in late September failed to elicit a strong reaction from the market, while slowing economic growth since the Covid-19 pandemic and the rise in the popularity of electric vehicles have led to a sharp fall in oil demand in the world’s second-largest economy.
Comment was posted a day later OPEC+ members agree to delay U.S. crude oil futures rose more than 2% following plans to increase output by one month in December. West Texas Intermediate crude oil rose 2.24% to $71.73 a barrel, in line with the international benchmark Brent crude oil The stock was up 2.17% at $75.27 as of 12 noon in London.
“This is not the first time that we have postponed a price increase, which was supposed to be done gradually and in phases… This is just a continuation of our policy of ensuring a strong focus on the market,” Arghese said, adding that the next ministerial meeting on December 1 will There is much more to observe and consider before the meeting.
“This is not something unusual, so to speak, and it is not part of the way OPEC+ operates since we reached the agreement,” he said.
OPEC+, composed of OPEC members and several oil-producing countries outside the organization, has implemented a series of production cuts and extension measures to boost the market since the end of 2022 as global supply continues to increase.
About The Author
