OPEC on Wednesday stuck to its forecast for relatively strong growth in global oil demand this year and next, saying economic growth and a recovery in air travel would support fuel consumption in the summer.

World oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025, the group said in a monthly report. Both forecasts were unchanged from last month.

"Busy traffic and air travel are expected in the northern hemisphere during the summer travel season, boosting demand for transportation fuels and driving growth in U.S. fuel consumption," OPEC said in the report.

Forecasters are more divided than usual over the strength of oil demand growth this year and over the medium term, in part because of disagreements over the pace of the global transition to cleaner fuels. OPEC’s demand outlook is at the high end of the industry’s, but it does not predict when demand will peak.

Earlier on Wednesday, BP said in its annual Energy Outlook that demand would peak next year under both of its main scenarios.

The International Energy Agency (IEA), which represents industrialized nations, expects demand growth in 2024 to be much lower than OPEC, at just 960,000 bpd, and will provide its latest view on Thursday.

OPEC's report pointed to an oil supply gap in the coming months and in 2025 that was larger than the U.S. Energy Information Administration (EAI) forecast on Tuesday.

The OPEC report also forecast demand for OPEC+ crude at 43.6 million bpd in the third quarter, far higher than the alliance’s current production.

OPEC also raised its forecast for world economic growth this year to 2.9% from 2.8%, saying there was potential room for that figure to rise, citing strong growth outside the developed countries of the Organisation for Economic Co-operation and Development (OECD).

"Economic growth momentum in major economies remained strong in the first half of the year, a trend that supports the generally positive growth trajectory in the recent period," OPEC said.

Countries that have poorly implemented production cuts are still overproducing

OPEC+ agreed to gradually withdraw its voluntary production cut of 2.2 million barrels per day from October as it remained optimistic about the demand outlook. But before that, the compliance of member countries with production limits remained uneven. Three major members of the alliance have not yet complied with their targets, let alone started additional compensatory production cuts.

OPEC+ data shows that the alliance's main members Iraq, Kazakhstan and Russia continue to produce more than their production quotas. Although Russia made a significant production cut in June, the three countries' combined supply is still several hundred thousand barrels per day above the quotas set at the beginning of the year, according to its monthly report.

Russia, which co-leads OPEC+ with Saudi Arabia and is facing heavy military spending in Ukraine, cut output by 114,000 bpd last month to 9.139 million bpd, still 161,000 bpd above its designated quota, the report showed.

Iraq, which has often chafed at OPEC+ output curbs as it seeks revenue to rebuild its war-torn economy, cut its output by 25,000 bpd to 4.189 million bpd, but still is 189,000 bpd above its limit.

Last month, OPEC+ outlined a plan to gradually restore idle supply from the fourth quarter but stressed it was temporary after oil prices slumped. The group is due to hold a monitoring meeting on Aug. 1.

Brent crude is trading near $85 a barrel as OPEC+ supply curbs have helped balance the market against big supply growth this year from the U.S. and elsewhere in the Americas. But that may still be a bit too low for OPEC+ members, including Saudi Arabia, which need prices closer to $100 a barrel to pay for lavish government spending, according to International Monetary Fund estimates.

Article forwarded from: Jinshi Data