Why OPEC Should Be Worried About Oil Demand Forecasts

Why OPEC Should Be Worried About Oil Demand Forecasts | OilPrice.com

Why OPEC Should Be Worried About Oil Demand Forecasts By
Editorial Dept- Mar 15, 2024, 8:00 AM CDT

OPEC+ has found itself in the unfortunate position of once again battling against non-OPEC producers to keep the market balanced. In its latest forecast, the EIA sees the non-OPEC+ members of the United States, Brazil, Canada, and Guyana as accounting for more than 80% of the global supply growth this year – with the United States accounting for much of it.

The EIA now sees production falling from OPEC+ members by 1 million bpd. Meanwhile, non-OPEC+ members will be churning out an additional 1.4 million bpd. Next year, OPEC+ production is expected to increase, the EIA said, by 900,000 bpd. non-OPEC+ production will grow in 2025 by 1.1 million bpd.

For OPEC, the additional oil output from non-OPEC+ members not only means delaying its production cut rollbacks - it also means ceding market share.

On the demand side of the equation, it’s been hard to ignore the stark differences in between outlooks from OPEC and the IEA - it’s been nearly decades since they’ve been so far apart, with some industry analysts chastising the IEA for its green-colored outlook, pegging oil demand growth at 1.2 million bpd. Meanwhile, OPEC, which has a particular self-interest in the market’s view of healthy oil demand, sees oil demand growth forecast at 2.2 million bpd. This is a huge gap, leaving analysts and traders guessing as to which forecast will be the closest to reality. The EIA is sandwiched in the middle, seeing a 1.4 million…