Issue 32

Authors: OIES,

OIES Oil Monthly – Issue 32

The new issue of OIES Oil Monthly, including our latest short-term oil market outlook to 2025, is now available.

– Extended OPEC+ cuts and robust non-OECD demand have prompted a rise in our Brent price forecast in 2024 to $82.9/b from $82.1/b, while the 2025 view is steady at $79.4/b. Downside revisions to our supply forecast in 2Q24 reflecting the extension of the additional OPEC+ cuts and extra crude production cut from Russia, combined by robust demand mainly from non-OECD countries, flipped a balanced market into deficit this year, supporting a higher 2024 Brent price forecast. To the extent that stocks remain under pressure in 2024, we expect Brent to rise to the mid-to-high $80s in Q4.

– The extension of the additional OPEC+ voluntary cuts in Q2 and new production cut pledge from Russia in the same period flipped the oil market balance into a 400 kb/d deficit in 2024, from a previously anticipated balanced year. We now forecast the market remaining in a 1.3 mb/d deficit in Q2, following a 380 kb/d deficit in Q1. In H2, the market is expected to hold near balance building a marginal 40 kb/d surplus before moving to a 390 kb/d surplus in 2025, unchanged from last month’s forecast. Accordingly, OECD commercial stocks are unlikely to build significantly this year.

– Our forecast for global oil demand remains unchanged at 1.5 mb/d in 2024 and 1.1 mb/d in 2025. A strong start to the year in the non-OECD, particularly India and China, offset weakness to the OECD demand growth outlook, which remains flat for the year as a whole. Non-OECD demand is forecast to grow by 1.4 mb/d, albeit growth is expected to soften slightly in H2 but to remain solid. Diesel/gasoil demand in 2024 is scaled back, remaining the smallest growth contributor among key fuels in the product mix.

– We have lowered our global supply growth forecast by 360 kb/d to 930 kb/d in 2024 but upgraded supply growth by 390 kb/d to 1.9 mb/d in 2025. Our forecast downgrade for 2024 reflects the extension of the additional OPEC+ cuts of 1.7 mb/d in Q2 and the pledged 470 kb/d cut from Russia, on top of its current 500 kb/d voluntary cut. Russia will progressively target reduced supply in April-June. Accordingly, OPEC crude growth in 2024 is downgraded by 420 kb/d to -170 kb/d from 250 kb/d forecast last month. Non-OPEC crude growth is downgraded by 100 kb/d to 830 kb/d in 2024, with forecast revisions extending beyond non-OPEC+, most notably to the US crude growth outlook that is revised lower by 120 kb/d to 360 kb/d. This is offset by small improvements in non-OPEC liquids supply elsewhere.