Issue 31

Authors: OIES,

OIES Oil Monthly – Issue 31

The new issue of OIES Oil Monthly, introducing our first oil market outlook for 2025, is now available.

– Our Brent price forecast stands at $82.1/b in 2024, from $82.6/b in 2023, falling to $79.1/b in 2025. We continue to forecast a balanced market this year prompting us to maintain our Brent price forecast unchanged at $82.1/b, tracking within the $75-85/b range. For 2025, our first Brent price forecast stands at $79.1/b, with prices after Q1 falling back to the $75-80/b range as the supply/demand balance loosens. Price risks to the outlook are skewed to the downside in 2024, but the balance of risks shifts to the upside in 2025.

– The oil market is forecast near balance in 2024, before building to a 370 kb/d surplus in 2025. In 1Q24, we project an 840 kb/d deficit with crude stocks falling sharply in the first quarter of the year. Assuming the gradual return of the withheld 1.7 mb/d in voluntary OPEC+ cuts in 2Q24, we forecast the market flipping into surplus in 2Q24 and 3Q24. However, the projected surpluses beyond 1Q24 are conditional on OPEC+ output policy, as an extension of the additional voluntary cuts in 2Q24 alone could push the oil market into a 460 kb/d deficit for the full year. By the same token, OPEC+ output policy beyond December 2024 will shape balances in 2025, which currently register surpluses in all quarters.

– Global oil demand is forecast to grow 1.5 mb/d in 2024, 75 kb/d higher than our previous forecast, and 1.1 mb/d in 2025. Our improved forecast in 2024 reflects small upgrades in the non-OECD outlook which is lifted to 1.5 mb/d, mainly due to China and India, while OECD demand growth falters. These regional dynamics are forecast to continue in 2025, with non-OECD demand growth softening to 1.1 mb/d and OECD demand contracting by 50 kb/d. In terms of products, transport fuel demand slows near 2010-2019 levels in both years at around 1 mb/d, while petchems demand growth strengthens above the historical average, led by naphtha.

– Global oil supply is forecast to grow 1.3 mb/d in 2024, unchanged from our previous forecast, and 1.5 mb/d in 2025. Non-OPEC crude growth is forecast to slow to 930 kb/d in 2024 led by the US and Brazil, from 1.6 mb/d in 2023. OPEC crude growth is confined only within the exempt OPEC-3 accounting for 240 kb/d of the total, having registered 670 kb/d of growth last year. For 2025, we forecast a further slowdown of non-OPEC crude growth to 610 kb/d and OPEC growth of 680 kb/d. Uncertainty over supply is elevated in both years amid uncertainty over OPEC+ cuts and as geopolitical risks rise.