On December 11, OPEC released its latest monthly oil market report, illuminating the shifting dynamics within the global energy sectorThe organization adjusted its 2024 consumption growth forecast downward by 210,000 barrels per day, bringing it to 1.6 million barrels per dayAdditionally, the prediction for 2025 was also reduced to 1.4 million barrels per daySince July of this year, OPEC's revised forecasts represent a significant 27% drop.

Despite the cuts, analysts assert that the current estimates remain above general market expectations, suggesting a gap between OPEC's projections and actual consumption data observed this yearThe ongoing adjustments highlight the organization's struggle to maintain accuracy amidst fluctuating market conditions.

Notably, the average daily oil production of OPEC in November 2024 is projected to be 26.66 million barrels, reflecting an incremental increase of 104,000 barrels from October, with Libya being a key contributor to this rise

This production growth comes at a time when the global demand for petroleum continues to fluctuate.

The January report signifies OPEC's largest downward revision to global oil demand forecast, with predictions now set at an increase of 210,000 barrels a day for 2024. Prior estimates had indicated growth of up to 1.82 million barrels per dayThe reduction highlights OPEC's late recognition of deteriorating market situations, as they have lowered expectations by a substantial measure since the third quarter.

This reassessment corresponds with negative data that emerged from the third quarter, impacting the Americas and Asia-Pacific regionsHowever, these cuts were somewhat mitigated by adjustments made for European oil demand, which showed a rise based on real data.

As for the Organization for Economic Co-operation and Development (OECD) countries, an oil consumption growth exceeding 100,000 barrels per day is anticipated, chiefly attributed to the Americas, with support coming from growth in Europe

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Conversely, a slight decline is expected in the Asia-Pacific region's oil demand, painting a complex picture of consumption trends across regions.

Among non-OECD nations, forecasts suggest an annual demand growth of about 1.5 million barrels per day, driven by robust consumption patterns in China, India, the Middle East, and Latin AmericaThis analysis supports projections that total global oil demand will reach approximately 105.5 million barrels per day in the fourth quarter of 2024 and 103.8 million barrels per day for the entire year.

Looking ahead to 2025, it appears global oil demand is expected to increase by 1.4 million barrels per day—an encouraging trend reminiscent of pre-pandemic levelsThe estimates suggest that the global oil demand could reach 106.9 million barrels per day in the last quarter of 2025, culminating in a total of about 105.3 million barrels per day for that year.

Turning to the future landscape of oil pricing, recent actions taken by Saudi Arabia have sent ripples through the market

The kingdom has announced a reduction in the official selling prices of its crude oil to Asia, marking the lowest levels in four years with adjustments surpassing market expectationsStarting in January 2025, Saudi Arabia plans to cut prices for all oil grades aimed at the Asian market, reducing the price of Arab Light and Super Light grades by $0.60 and $0.70 per barrel, respectively, alongside a $0.70 cut for Arab Medium and Heavy grades.

In their statements, Saudi Aramco, the national oil company, indicated similar price cuts for shipments to Northwestern Europe and the Mediterranean, while prices remained unchanged for North American marketsThis nuanced pricing strategy appears in response to ongoing sluggish market prospects.

Further compounding these dynamics, on December 5, OPEC+ announced a postponement of its production increase plansReports indicate that eight member countries within OPEC and its non-OECD partners resolved to extend voluntary production cuts of 2.2 million barrels per day—initially set to expire this December—until the end of March next year

Additionally, there was an extension of the production target of 39.725 million barrels per day until 2026, reflecting OPEC+’s commitment to stabilizing the international oil market and providing ongoing transparency and guidance.

The International Energy Agency (IEA) recognized that despite the current OPEC+ production cuts, the global supply of crude oil is expected to exceed demand by more than 1 million barrels per day in the forthcoming yearMeanwhile, analysts at Morgan Stanley have revised their forecasts for Brent crude prices, adjusting estimates for the third and fourth quarters of 2025 from $68 and $66 per barrel, respectively, to $70.

The projections stemming from OPEC+'s deferred production plans suggest a decrease in production quotas of about 800,000 barrels per day in 2025, with a reduction forecast of 1.3 million barrels per day in the fourth quarterCoupled with improvements in compliance and a slight decline in Iranian production, the impending global oil supply surplus has been recalibrated to approximately 300,000 barrels per day—significantly lower than previous estimates of 700,000 barrels.

In contrast, Citigroup's global head of commodity research, Max Layton, has warned that with emerging American policy agendas, the outlook for oil prices in the coming year appears increasingly negative