Key conclusions
1. In Q2 2024 a deficit was created in the market, partially due to oil production cuts by OPEC+. According to EIA forecasts, the deficit may persist until the end of Q2 2025.
According to an EIA assessment, to cover the deficit global oil inventories declined by 0.5 million bbl/d in the first half of 2024 and will continue to go down until the end of the second half of 2025.
According to analysts' forecasts, after the gradual phasing out of additional voluntary cuts by OPEC+ countries, and greater supplies from non-OPEC+ countries, a balance may be achieved in Q3 2025.
2. According to Q2 2024 results, global oil demand rose 0.9 million bbl/d compared to Q1 2024, due to an increase in oil consumption from the US, China, and India.
Demand in Q2 2024 was gradually supported by seasonal factors: growth in the number of car journeys, a rise in air travel, and an increase in energy consumption in the summer season.
Similar to previous forecasts, non-OECD countries, especially Asian ones, are projected to be the main drivers of global oil demand growth in 2024, while a slight drop in oil consumption is forecast in OECD countries. The increase in oil consumption in the US will not fully offset a reduction in demand in Europe and Japan.
At the same time, in 2025 EIA analysts also forecast a slight rise in demand in OECD countries, driven by the consumption growth in the US and a slight recovery in demand in Europe.
3. In Q2 2024 the oil supply rose 0.3 million bbl/d, but did not offset growing demand. The OPEC+ alliance reduced production by 0.7 million bbl/d, while non-OPEC+ countries increased supply by 1.0 million bbl/d (of which the US accounted for 0.6 million bbl/d).
In June the OPEC+ regular meeting was held, at which it was decided to extend voluntary production cuts by 1.65 million bbl/d until the end of December 2025, and adjust additional voluntary cuts by 2.2 million bbl/d (gradually from October 2024 to September 2025). The alliance also maintained quotas for 2025 for almost all participants, except for the UAE.
At the end of 2024 the global oil supply is projected to rise. The supply increase in non- OPEC+ countries (i.e. the US, Canada, and Guyana) will offset the production decline in OPEC+ countries. In 2025 EIA analysts forecast a supply increase, both by OPEC+ and other countries.
4. Q2 2024 saw fluctuating dynamics for oil prices: periods of growth were followed by periods of decline and vice versa. In the short term, the equilibrium price will be determined by a combination of factors, including interest rate levels, seasonal factors, the geopolitical situation, and the possibility of achieving a market balance.
The forecast of oil quotes for 2024-2025 is characterised by a greater level of consolidation, unlike medium- and long-term forecasts, which show a wider range of analysts' assessments.
The current long-term (post-2028) consensus forecast for the Brent crude price is around USD 71/bbl, in real terms, in 2024 prices.
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