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Global oil demand is set to rise by 2.4 million barrels per day (bpd) this year and by another 2.2 million bpd next year amid improving Chinese economy, OPEC said on Thursday, leaving its demand forecast for both 2023 and 2024 unchanged, despite fears of slowing economies and demand destruction.
Developing economies, led by China, will account for most of this year’s oil demand growth, OPEC said in its Monthly Oil Market Report (MOMR) published today. World oil demand is set to reach a record average of 102.1 million bpd in 2023, driven by a 2.3-million-bpd demand increase in the non-OECD region, OPEC noted.
“A steady increase in transportation and industrial fuel demand, supported by a recovery in China’s activity as well as other non-OECD regions, is projected to boost demand in the region in 2023,” the cartel said.
Next year, OPEC expects another rise in global oil demand, by 2.2 million bpd, also unchanged from last month’s assessment. In 2024, world oil demand is projected to average 104.3 million bpd. Demand in the OECD Europe and the OECD Asia Pacific regions is set to remain below pre-pandemic levels, OPEC said, due to expectations for slower economic activity and ongoing supply chain bottlenecks that would weigh on industrial activity, particularly in Europe.
But demand in non-OECD economies is expected to rise by nearly 2 million bpd, led by China and the Middle East, according to OPEC.
The cartel’s outlook continues to be positive for oil demand growth in 2024, as “solid global economic growth, amid continued improvements in China, is expected to further boost oil consumption” next year.
OPEC’s view for next year’s oil demand growth is much rosier than the one from the International Energy Agency (IEA), which now sees 2024 global demand growth at less than 1 million bpd.
In its Oil Market Report for October, the agency lowered on Thursday its demand growth estimate for 2024 by around 100,000 bpd, due to expectations of slowing economies and energy efficiency weighing on oil consumption. The IEA sees next year’s oil demand growth at 900,000 bpd now, down from the 990,000 bpd increase expected in last month’s report.
“Global oil demand growth is set to slow to 900 kb/d in 2024 as the post-Covid rebound runs out of steam while the economic expansion slows and energy efficiency improvements weigh on oil use,” the IEA said today.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com