OPEC has lowered its oil demand growth forecasts for 2025 and 2026 by more than 0.1 million barrels per day, with expected demand growth for both years at 1.3 million barrels per day. Previously, the US Energy Information Administration (EIA) significantly reduced its 2025 growth forecast by 30% to 0.9 million barrels per day, while Goldman Sachs expects consumer growth to be only 0.5 million barrels per day. The International Energy Agency (IEA) will release its crude oil monthly report on Tuesday.
In the monthly Crude Oil Product report released on Monday, OPEC significantly revised down its forecast for Global oil demand growth in 2025 and 2026, while also lowering global economic growth expectations, citing that Trump's tariff policy may severely impact Global oil Consumer.
OPEC cut its oil demand growth forecasts for 2025 and 2026 by over 0.1 million barrels per day, expecting the demand growth for both years to be 1.3 million barrels per day, equivalent to about a 1% growth rate. Previously, OPEC had projected the demand growth for those two years to be 1.45 million barrels per day and 1.43 million barrels per day respectively.
Despite the downward adjustment, OPEC's forecast remains much more optimistic than those from Other Institutions in the industry. The US Energy Information Administration (EIA) last week significantly lowered its 2025 growth forecast by 30% to 0.9 million barrels per day, while Goldman Sachs predicted a Consumer growth of only 0.5 million barrels per day.
OPEC pointed out in the report:
Strong Aviation travel demand and healthy road travel will support oil demand. However, this forecast faces uncertainty surrounding the development of the Global economy, particularly due to the new trade tariffs announced by the USA.
It is noteworthy that OPEC's demand forecasts have frequently been inaccurate in recent years. OPEC previously issued a more optimistic outlook for 2024 than the entire industry, but subsequently cut its forecast by 32% over six consecutive monthly revisions.
Next, the market is paying attention to the Crude Oil Product monthly report released by the International Energy Agency (IEA) on Tuesday. The IEA currently estimates this year's demand growth at 1.03 million barrels per day, significantly lower than OPEC's forecast.
Saudi Arabia is leveraging the market downturn to exert pressure, with oil prices dropping to a four-year low.
Affected by the panic caused by the trade war sweeping the global market, international oil prices fell to a four-year low last week, triggering widespread selling of risk assets and raising concerns about the demand outlook for Crude Oil Product.
Unexpectedly, OPEC leader Saudi Arabia is using the market decline to guide the organization and its allies to accelerate planned production increases, trying to force non-compliant member countries to adhere to production quotas. Previously, OPEC+ unexpectedly decided to increase supply by 0.411 million barrels per day in May, equivalent to the incremental increase planned for the previous three months.
As of the time of writing, Brent crude is currently trading at around $65 per barrel, while West Texas Intermediate (WTI) is trading at around $62 per barrel.
The impact of the trade war is expanding, and global economic expectations are being revised downward simultaneously.
Trump's comprehensive tariff policy is also putting pressure on the global economy, prompting OPEC to revise its economic growth forecasts for this and next year down from 3.1% and 3.2% to 3.0% and 3.1%.
OPEC wrote in the report:
At the start of 2025, the fundamentals of major economies are strong and resilient, contributing to global economic growth. However, the latest developments in global trade relations have altered the outlook, introducing new uncertainties against the backdrop of an escalating tariff war.
OPEC now expects the growth rate of the USA economy in 2025 to be 2.1%, down from the previous 2.4%, and in 2026 to be 2.2%, while the Eurozone economy is expected to grow by 0.8% and 1.1% during the same period.
Editor/lambor
