Global oil demand to grow by 1.9m bpd in 2024, says Wood Mac

By News Desk
March 01, 2024
Working oil pumpjacks are pictured on the outskirts of Taft, Kern County, California on September 21, 2023. — AFP

LONDON: Global oil demand will grow by 1.9 million barrels per day (bpd) this year, according to a prediction by energy research company Wood Mackenzie, a forecast close to the Organisation of the Petroleum Exporting Countries' (OPEC) estimate for 2024.


In remarks shared with delegates at a Wood Mac briefing during the Energy Institute conference in London, the firm's vice president of oils research Alan Gelder predicted, like most other forecasters, that the bulk of that rise would come from China and India.

Forecasts for oil demand growth in 2024 differ dramatically, reflecting contrasting views on how quickly the world will shift from fossil fuels. OPEC believes oil use will keep rising over the next two decades, while the IEA, which represents industrialised countries, predicts it will peak by 2030.

OPEC expects another year of relatively strong demand growth of 2.25 million bpd, while the International Energy Agency expects much slower growth of 1.22 million bpd. Meanwhile, a wide-ranging Reuters survey showed most analysts expect global oil demand to grow by somewhere between 1 million and 1.5 million bpd in 2024.

Wood Mac's prediction for demand growth in 2025 is lower at 1.4 million bpd. OPEC expects growth of 1.85 million bpd in 2025, while the IEA is expected to reveal its 2025 prediction in April.

OPEC+ has implemented output cuts since late 2022 to support the market, as output in the U.S. and other non-member producers has risen. In November, OPEC+ agreed to voluntary output cuts totalling about 2.2 million bpd for the first quarter. Earlier this week, sources told Reuters that OPEC+ is considering extending the cuts into the second quarter, and could keep them in place until year end.

Members can expect to be called upon to increase volumes to balance the market in 2024 despite the November decision, Wood Mac's Gelder said, adding he assumes the cuts will be kept in place through the second quarter.

Oil prices have found support this year from rising geopolitical tensions including attacks by the Iran-aligned Houthi group on Red Sea shipping, although concern about economic growth and high interest rates in Western economies has weighed.

A Reuters poll showed on Thursday that the Middle East conflict is unlikely to move the needle much in oil markets this year with ample global supplies reining prices in around the current $80 a barrel level.

A survey of 40 economists and analysts forecast Brent crude would average $81.13 per barrel in 2024, slightly down from the $81.44 consensus in January. U.S. crude forecasts were cut to $76.54 a barrel, from $77.26 last month.

"Disruption in the Red Sea has less impact because there are alternative routes available," said John Paisie, president of Stratas Advisors, referring to attacks on shipping by Yemen's Houthis.

"It is unlikely that the volumes of oils being shipped will be materially impacted, and supply/demand fundamentals will be a more important factor as we move into Q2 and Q3," he added.

Wall Street bank Goldman Sachs forecast a summer Brent peak of $87 per barrel, noting that the geopolitical risk premium remains modest, with only a $2 per barrel boost to Brent, and crude production remaining unaffected.

"Spare capacity has reached a multi-year high, which will keep overall market sentiment under pressure over the coming months," said Florian Grunberger, senior analyst at data and analytics firm Kpler.

The largest OPEC producers and some of their allies - a group known as OPEC+ - have the capacity to pump more oil as a consequence of decisions to curb output. "It is not until larger voluntary cuts get released back into the market during the summer months, once global balances tighten, that we'll see a potential decline in spare capacity and a change in overall sentiment," Grunberger said.

OPEC+ in November agreed to voluntary output cuts totalling about 2.2 million bpd for the first quarter. The group is expected to announce a decision in March on whether or not it will extend these cuts to bolster prices. The International Energy Agency estimates that OPEC's total spare capacity is 5.1 million barrels per day (bpd), of which 3.2 million bpd is held by Saudi Arabia.