Global demand forecast unchanged as OPEC bets on China, India

The Organization of the Petroleum Exporting Countries (OPEC) is counting on China and India to stimulate global oil demand growth this year, amid macroeconomic uncertainties in the US and Europe.

PHOTO: (L-R) National flags of India and China. Getty Images

OPEC’s latest global crude demand growth forecast remains largely unchanged from last month's estimates, at 2.33 million b/d. The Monthly Oil Market Report for May still sees the world's oil demand at 101.9 million b/d for the year.

According to the report, China and India will drive most of the growth in global oil demand.

Non-OECD regions, such as Asia, the Middle East and Russia are projected to consume an average of 55.88 million barrels per day. Among these, China is expected to guzzle 15.66 million b/d and India is estimated to consume 5.39 million b/d this year.

Two Asian guzzlers

The Vienna-based agency says China's reopening has boosted economic growth since the beginning of 2023, and India's economic growth momentum has been solid in the first half of this year because of government initiatives.

“China, the second largest economy in the world, seems to have improved further after its reopening efforts and growth in 1H23 [first half of this year] appears to be well supported,” it argues.

On the other hand, “India is enjoying steady growth, as indicated by the latest lead indicators, like PMIs. This dynamic is well supported by both the services sector as well as the industrial side of the economy.”

There is a possibility that China will experience an "even stronger-than-anticipated rebound" this year, and India could "surprise to the upside" with a robust domestic market, the producers' cartel predicts.

A shadow of doubt

Oil demand in the OECD region, mainly the US and Europe, is forecast at 46.02 million b/d. This is roughly equivalent to the region's overall demand in 2022. However, OPEC does not rule out downside risks.

The report warns that OECD economies continue to face challenges due to "high inflation, higher interest rates in the US and the Eurozone, and high debt levels" all of which may adversely affect global crude demand.

“In addition, the US debt ceiling issue has so far not been resolved, a matter that could have significant economic consequences, as well,” it adds.

By Konica Bhatt

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