Key conclusions
1. In Q3 2024 analysts’ forecasts came true: in the face of slowing global oil demand growth rates, a deficit on the oil market persisted, which can last until the end of Q1 2025. The impact of a combination of factors will determine whether a balance is achieved.
Demand dynamics will largely depend on China’s growth or slowing oil demand. In addition to China, Asian countries, including India, are gradually taking a dominant position in the global increase in oil demand.
On the other hand, the supply will come under pressure from the implementation of a planned strategy by OPEC+ alliance members to reduce cuts and thus boost oil production, as well as a continuing trend towards increased production from non-alliance countries.
2. Despite the rise in global oil demand in Q3 2024, the growth rate gradually slowed and the EIA reports that demand reached 103.3 million bbl/d.
According to the EIA, China’s oil consumption fell, while consumption in the US was virtually unchanged. Traditional seasonal demand has not reversed the slowdown in industrial activity.
At the same time, according to IEA estimates, as a result of a withdrawal from global oil inventories, the volume of oil refining and oil product stocks has been increasing since May.
Analysts expect that oil demand in 2025 will chiefly be supported by developing Asian countries.
3. In Q3 2024 the supply remained at the previous quarter’s level of 102.5 million bbl/d. Non-OPEC+ countries increased production by 0.2 million bbl/day, while OPEC+ countries cut production by 0.2 million bbl/d.
In September 2023 the OPEC+ alliance postponed plans to increase production from October to December 2024. OPEC+ spare production capacity is at historical highs, the IEA reports.
In Q3 2024 the largest production cut, according to the EIA, was observed in Libya, where internal political tensions led to a complete halt in oil production and exports in August.
Analysts expect that by the end of the year production growth will be observed mainly in non-OPEC+ countries, however, the alliance countries may increase the supply as early as 2025 as well.
4. In Q3 2024 oil prices fell steadily, driven by slowing oil demand from China, due to fears of further economic growth in the world’s largest economies and a risk of oversupply. At the same time, geopolitical tensions in the Middle East persisted, which is pushing quotes up.
The forecast of oil prices for 2024–2025 is still characterised by a high level of consolidation, while mid- and long-term forecasts point to uncertainty when it comes to the further market balance.
The current long-term (post-2028) consensus forecast for the Brent oil price is around USD 71/bbl, in real terms, in 2024 prices.
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