The Organization of the Petroleum Exporting Countries (OPEC) predicts a significant rise in fuel consumption this summer, coupled with a positive outlook for global economic growth in 2024. This forecast, released in their monthly report, maintains their previous prediction of steady growth in global oil demand throughout the year.
The report highlights a projected increase of 2.25 million barrels per day (bpd) in global oil demand by the end of 2024. This growth is expected to continue in 2025, with a projected rise of 1.85 million bpd. OPEC’s optimism is fueled by several factors, including a potential economic upswing exceeding current expectations.
“Despite some downside risks, the continuation of the momentum seen in the beginning of the year could result in further upside potential for global economic growth in 2024,” the report states. This economic momentum is anticipated to translate into increased consumer spending, potentially leading to higher demand for oil-derived products.
Looking ahead to the summer months, traditionally a period of heightened fuel consumption, OPEC expects a significant surge in jet fuel use. Their report forecasts a year-on-year increase of 600,000 bpd for jet fuel in the second quarter. This rise is likely due to anticipated growth in summer travel as pandemic restrictions continue to ease.
The demand for gasoline and diesel is also predicted to climb during the summer season. OPEC’s report suggests a increase of 400,000 bpd for gasoline and 200,000 bpd for diesel compared to the same period last year.
OPEC's decision to maintain production cuts enacted alongside its allies, known as OPEC+, also contributes to the potential for a tighter oil market and potentially higher prices. Last week, OPEC+ agreed to keep these cuts in place until the end of June. The organization is scheduled to meet again in June to determine the future of these production quotas.
While OPEC acknowledges potential risks to their forecast, the report underscores the need for “careful market monitoring” throughout the summer months to ensure a stable oil market. The coming months will be crucial in determining the accuracy of OPEC's predictions and the subsequent impact on global oil prices.