OPEC expects oil market to be tighter next year as demand climbs

OPEC expects the global oil market to be tighter next year as it forecasts greater growth in global oil demand next year than other major forecasters, Bloomberg News reported July 13, 2023, according to a report.

Global oil consumption will increase by 2.2 million barrels a day to 104.3 million barrels a day next year, OPEC said July 13 in its first detailed assessment of the market in 2024. That's twice the growth rate forecast by the IEA, which advises oil-consuming countries.

Demand growth will outstrip expected supply growth from outside OPEC, bringing world demand for OPEC crude to 30.2 million barrels a day, about 2 million barrels more than in June. That could allow OPEC to ease production restrictions imposed this year to support prices.

Saudi Arabia and its partners have curbed crude production to balance the market as the global economy weakens and supplies from individual OPEC+ exporters are unexpectedly strong.

On July 12, oil prices in London climbed above $80 per barrel for the first time in two months as these supply constraints (including additional unilateral production cuts by Saudi Arabia in July and August) tightened the market. Asian demand also appears to be strong, despite shaky economic indicators.

The Paris-based IEA also released its latest outlook on Thursday, projecting that global oil demand will increase by 1.1 million barrels a day next year. OPEC said improvements in fuel efficiency and the rapid spread of electric vehicles will limit growth in oil consumption.

Crude oil production by OPEC's 13 members averaged 28.2 million barrels a day in June, slightly higher than in May, the report said.

The 23-nation OPEC+ coalition will formally hold an oversight meeting next month, but the exact date has not yet been set. The alliance will hold a meeting of all oil ministers on July 26th.