Issue 33

Authors: OIES,

OIES Oil Monthly – Issue 33

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

– Tighter-than-expected balances compounded by heightened geopolitical risks have prompted us to raise our Brent price forecast by $2.5/b to $85.4/b in 2024 and by $1.6/b to $81.0/b in 2025. Our Brent price forecast revisions this month largely reflect an improving global oil demand outlook on the back of a resilient global economy, as geopolitical risks rise and become more pressing. We have now raised our 2Q24 price forecast to $90/b from $81.4/b, with H2 prices falling back to the mid-$80s assuming no further extension of the OPEC+ cuts in Q3. At the time of writing, the consequences of Iran’s direct retaliatory attack against Israel remain unknown, but they do add a new layer of uncertainty to this month’s outlook. For now, the price band in 2024 ranges between $74/b and $99/b, with the upper limit rising by $7.6/b since last month.

– We have deepened the previously projected oil market deficit in 2024 by 160 kb/d to -560 kb/d and lowered the expected surplus in 2025 by -180 kb/d to 210 kb/d. The resilience of global oil demand in 1Q24 while global supply was subdued has prompted us to deepen the deficit in the first quarter to -1 mb/d followed by -1.3 mb/d in Q2. Assuming a gradual reversal of the OPEC+ voluntary cuts in 3Q24, we forecast the market to flip into a small 100 kb/d surplus before returning close to balance in Q4. For 2025 as a whole, we reduced the previously projected surplus by 180 kb/d on the back of a more robust global demand outlook.

– We have raised our global demand growth forecast by 180 kb/d to 1.6 mb/d in 2024 and by 90 kb/d to 1.2 mb/d in 2025. Our improved forecast for 2024 largely reflects a more resilient OECD demand outlook, led by the US, up by 140 kb/d to 170 kb/d. The gains to the OECD outlook for this year carry over to 2025 with small upgrades lifting our previous forecast by 80 kb/d to 75 kb/d. The non-OECD demand growth outlook remains relatively unchanged at 1.5 mb/d in 2024 and 1.1 mb/d in 2025.

– Our global oil supply forecast is little changed, up by 60 kb/d to 1 mb/d in 2024 and by 70 kb/d to 2 mb/d in 2025. Heading into 2Q24, OPEC+ is set to extend its 1.7 mb/d voluntary cuts with the forecast assuming stronger output discipline by the group. Russia will also enforce a progressive voluntary production cut that will see its output falling to 8.98 mb/d by June and lifting the total OPEC+ voluntary cuts in Q2 to 2.2 mb/d. Outside OPEC+, non-OPEC crude is forecast to grow by 810 kb/d, unchanged from last month, with the Americas remaining this year’s mainstay of expansion led by the US, Brazil, Guyana and Canada.