OPEC projects demand resilience from 2024 economic boom

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Sopuruchi Onwuka

The Organization of Petroleum Exporting Countries (OPEC) is providing strong market incentives for producers and investors in the petroleum industry, pointing at demand resilience that would surpass pre-pandemic levels despite recovering production from key member states.

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According to a market report from OPEC, the oil market is set to experience robust global demand in 2023 and 2024 as major economies post growth indices despite global inflationary headwinds.

The group of producers predicts world oil demand to rise by 2.25 million barrels per day (mbd) in 2024, lower than the growth rate of 2.44 mbd in 2023 which saw reopening of the Chinese economy after pandemic restrictions.

The Oracle Today reports that the American Energy Information Administration (EIA) is set to release its oil market outlook after a formal presentation later in the week. The International Energy Agency (IEA) which provides market data for the Organization of Economic Cooperation and Development (OECD) countries has already posted a weaker outlook for the market.

The OPEC projected that ease of coronavirus disease containment measures in key economies of the world would trigger jumps in oil demand from major industries like road transportation, air travel and tourism. Fuel consumption from these sectors, according to OPEC, would push oil demand beyond pre-pandemic levels.

The market report by OPEC triggered jumps in prices following economic growth in China where industrial output rose by about 4.5% and August refinery runs reached an all-time 15.23 mbd.

Brent crude prices rose as high as $91.82 a barrel after the report was released, hitting a fresh 2023 high.

OPEC held its forecast for world economic growth this year at 2.7% and kept next year’s figure at 2.6% citing a resilient first half and a steady global growth trend that had continued into the third quarter.

“Emerging Asia, particularly India, Brazil and Russia, could further surprise to the upside,” OPEC said.

“Moreover, if the U.S. continues to keep its current momentum, growth could turn out to be higher than expected.”

The OPEC report also showed OPEC oil production rose in August driven by a recovery in Iran’s production despite U.S. sanctions remaining in place on Tehran and Saudi Arabia’s voluntary cuts, as well as an increase in Nigeria.

OPEC output rose by 113,000 bpd in August to 27.45 million bpd, the report said.

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