The Organization of the Petroleum Exporting Countries, in its latest report, sticks to expectations on oil demand growth for 2023 and 2024 on expectations that major world economies will fare better despite existing global headwinds.
According to the report, OPEC expects that global oil demand will rise by 2.25 million barrels per day in 2024, compared to the growth of 2.44 million bpd in 2023.
“The ongoing global economic growth is forecast to drive oil demand, especially given the recovery in tourism, air travel, and steady driving mobility,” said OPEC in the report.
In its report, OPEC further pointed out that the global economic growth dynamics in the first half of 2023 have been resilient despite the numerous challenges, including high inflation, elevated interest rates, and geopolitical tensions.
“This steady global economic growth trend continued into the third quarter of 2023, supported by buoyant consumer spending, especially in the services sector. With this, the global growth is expected at 2.7 percent for 2023 and 2.6 percent for 2024,” added OPEC in the report.
The report added that Saudi Arabia is expected to witness robust growth in the near term driven by various reform initiatives by the government.
“In the near term, a sustained period of robust growth is anticipated, with support from both the oil and non-oil sectors, all driven by a strong commitment to government reform initiatives,” said OPEC about Saudi Arabia’s growth prospects.
Echoing the expected positive demand for oil and partially boosted by tighter supply from OPEC producers, crude prices rose on Tuesday.
November Brent crude futures rose 85 cents, or 0.9 percent, to $91.49 a barrel at 03:19 p.m. Saudi time, while US West Texas Intermediate crude futures for October firmed by $1.02, or 1.2 percent, to $88.31.
“Pre-COVID-19 levels of total global oil demand will be surpassed in 2023,” OPEC added in the report.
In a bid to stabilize the oil market, OPEC and its allies, known as OPEC+ began limiting supplies in late 2022, and as a result, Brent crude breached $90 a barrel last week for the first time in 2023.
In April 2022, OPEC+ decided to reduce global oil production, with Saudi Arabia voluntarily trimming output by 500,000 barrels per day.
Building on this commitment, Saudi Arabia implemented an additional 1 million bpd cut in June, a decision which was later extended until December 2023.