OPEC slashes Oil demand forecasts on weak economic outlook
- OPEC+ cuts global oil demand forecast by 210K barrels per day for this year.
- For 2025, the demand forecast is trimmed further by 90K barrels per day.
- WTI crude reacts with a modest rise to $69.59 per barrel following the updated demand outlook from OPEC+.
The Organization of Petroleum Exporter Countries and its allies, known as OPEC+, updated its forecast, expecting less demand for Crude due to the ongoing economic slowdown in China, India, and other regions.
OPEC+ revises demand projections downward, cites sluggish economic activity In China and India
OPEC’s global oil demand was revised down by 210K barrels per day (BPD) from November’s estimated 1.82 million to 1.61 million BPD YoY. For 2025, demand was cut by 90K BPD from the previous month's projections of 1.5 million BPD to 1.4 million YoY.
The OPEC noted, “The bulk of this revision is made in the third quarter, taking into account recently received bearish data for the third quarter.” The cartel added that China’s demand for oil shrunk by 81K BPD YoY.
OPEC cut its 2025 global oil demand growth estimate to 1.45 million bpd from 1.54 million bpd.
US Crude Oil, known as West Texas Intermediate (WTI), jumped on the headline from around $69.00 per barrel to its daily high of $69.59.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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