The global oil market looks healthy for the second half of the year, according to OPEC, which maintained its projection for robust oil demand in 2024 while raising its expectations for global economic growth.
The Organization of Petroleum Exporting Countries’ (OPEC) optimistic outlook comes as global oil prices have reached their highest level since January. Tight supply has fueled the surge, as OPEC’s monthly report revealed that Saudi Arabia met its voluntary output cut in July.
OPEC said it expects world oil demand to rise by 2.25 million barrels per day (bpd) in 2024, compared with growth of 2.44 million bpd in 2023. Both forecasts were unchanged from last month.
“Prospects for healthy oil fundamentals in the second half of the year, along with the pre-emptive, proactive and precautious approach of OPEC and non-OPEC producing countries to assess market conditions and take necessary measures at any time and as needed, will ensure stability of the global oil market,” OPEC said in its report.
In 2024 “solid” economic growth amid continued improvements in China is expected to boost the oil consumption, it added.
OPEC and its allies, together known as OPEC+, began limiting supplies in late 2022 to bolster the market and in June extended supply curbs into 2024. Tighter supply has underpinned a rally in oil prices, with Brent crude trading above $88 a barrel on Thursday, its highest since January.
The report nudged up OPEC’s forecast for world economic growth this year to 2.7% from 2.6% and raised next year’s figure by the same increment to 2.6%, saying growth in the United States, Brazil and Russia had surpassed initial expectations in the first half of 2023.
“Despite the latest positive developments, several uncertainties regarding economic growth in the second half of 2023 and 2024 require cautious monitoring,” OPEC said, adding that these include continued high inflation and the prospect of further increases to interest rates.
The report also showed that OPEC’s oil production fell sharply in July, driven by Saudi Arabia’s pledge to cut its output by 1 million bpd, a measure it has since extended to include September.
OPEC output fell by 836,000 bpd to 27.31 million bpd in July, OPEC said, citing figures it collects from secondary sources including analysts and oil industry media, driven by lower Saudi output.
Saudi Arabia told OPEC that it cut output by 943,000 bpd in July to 9.013 million bpd, delivering on its promise to lower July production by 1 million bpd. The pledge was first made at the June OPEC+ meeting and has been extended twice to include August and September.