The Organization of the Petroleum Exporting Countries (OPEC) has reaffirmed its positive outlook for global oil demand in 2024 and 2025, while also revising its economic growth forecasts upwards for both years.

In its latest monthly report released on Tuesday, OPEC cited a “positive trend” in economic growth and noted further potential upside, which could provide additional momentum to oil demand.

According to OPEC’s projections, world oil demand is expected to increase by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025, unchanged from the previous month’s forecasts. This optimistic view aligns with the organization’s anticipation of sustained economic expansion, with economic growth forecasts raised by 0.1 percentage points for both 2024 and 2025.

OPEC’s assessment stands out as more optimistic compared to other forecasters such as the International Energy Agency, reflecting the organization’s confidence in the market dynamics despite ongoing output cuts within the broader OPEC+ alliance aimed at stabilizing prices.

The report highlights several factors contributing to the supportive environment for oil prices in 2024. Conflicts in the Middle East and supply disruptions have provided support, although concerns regarding persistently high interest rates have tempered some of the gains. As of the latest update, Brent crude was trading around $82 a barrel, reflecting a modest increase of 0.5%.

OPEC attributed the recent rise in oil prices to a combination of factors, including a reduction in speculative selling pressure, supply interruptions, stronger-than-expected macroeconomic indicators, and signs of robust fundamentals in the oil market.

Looking ahead, OPEC’s economic outlook remains positive, with expectations of continued global economic growth. The organization now forecasts world economic growth of 2.7% for the current year, with a slight uptick to 2.9% projected for 2025. These projections are underpinned by the anticipation of ongoing moderation in general inflation throughout 2024 and 2025.

OPEC’s Expectation of Oil Demand Growth

For this year, OPEC’s expectation of oil demand growth is much more than the expansion of 1.24 million bpd so far forecast by the IEA. The IEA, which represents industrialised countries, is scheduled to update its forecasts on Thursday.

OPEC and the IEA have clashed in recent years over issues such as long-term demand and the need for investment in new supply. The IEA sees oil demand peaking by 2030 as the world shifts to cleaner energy, a view OPEC dismisses.

Earlier on Tuesday, OPEC’s Secretary General Haitham Al Ghais told Reuters he believed OPEC’s long-term demand outlook, which looks to 2045 and sees no peak in demand, is robust.

OPEC and the wider OPEC+ alliance have implemented a series of output cuts since late 2022 to support the market. A new cut for the first quarter took effect last month.

The OPEC report said that OPEC oil production fell by 350,000 bpd to 26.34 million bpd in January as the latest round of voluntary output cuts took effect.

OPEC’s latest report underscores its confidence in the resilience of oil demand and the broader economic landscape. Despite challenges posed by geopolitical tensions and monetary policy considerations, the organization remains optimistic about the outlook for both oil markets and global economic growth. As uncertainties persist, OPEC will continue to monitor developments closely to ensure stability and balance in the energy markets.