OPEC Cut to Global Oil Demand Forecast Remains Too Optimistic – Note
The Organization of the Petroleum Exporting Countries lowered its global oil demand forecast, but it is still far too optimistic, Commerzbank said in a Tuesday note.
Global oil demand is set to rise by 2.1 million barrels per day (b/d) in 2024, OPEC said in its monthly report released Monday. For 2025, OPEC continues to expect demand to rise 1.8 million b/d.
In contrast, the International Energy Agency said it only expects demand to rise by slightly less than 1 million b/d this year and next, the bank noted.
OPEC and allied producers’ didn’t adhere to their production agreement in July, Commerzbank said, citing surveys published in the past few days. OPEC+ overproduction reportedly rose to 170,000 b/d, up from 53,000 b/d in June.
Iraq is said to be responsible for the greatest over production, increasing output instead of reducing it as agreed. Overproduction of some countries, particularly Iraq, is putting the willingness of other countries to adhere to the supply agreement to the test, Commerzbank noted.
Kazakhstan and Russia cut production, but they still remained above agreed levels. The over production was not larger only because Nigeria and other countries fell short of their production targets and have not been able to reach their permitted output levels for some time, the bank said.
Overproduction is likely to be accompanied by weaker demand in China, with increasing signs this will not pick up significantly in the coming months, the bank said. Saudi Arabia is likely to export less crude oil to China in September, according to media reports citing trade sources.
The higher price level is likely to have discouraged selling after Saudi Arabia slightly raised the official selling prices for light oil grades to customers in Asia in September, Commerzbank said. The price increase was lower than expected, but prices are still higher than those of other Middle Eastern suppliers. #OPEC Cut to Global Oil Demand Forecast Remains Too Optimistic – Note
