The Global Oil Market Expects A Surge In Production And Moderate Growth In Demand

Fatih Birol, Executive Director of the International Energy Agency, predicts a surplus in global oil markets for the current year, driven by a substantial increase in production, particularly from the Americas, including the United States, Canada, Brazil, and Guyana. This surge in production is anticipated to more than meet the growing global demand for oil, resulting in a stabilization of the oil market and a moderation of prices throughout 2024, as reported by Al-Qabas daily.

Haitham Al-Ghais, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), remains confident in long-term oil demand projections, emphasizing that Saudi Arabia's decision to defer production capacity plans should not be interpreted as a sign of declining demand.

Birol forecasts a modest increase in global oil consumption, estimated between 1.2 to 1.3 million barrels per day, attributed to slowing economic growth in China and other nations.

OPEC's recent monthly report highlights fluctuations in oil production among member states, with Kuwait experiencing a decline while others saw marginal increases. Despite this, OPEC's overall production decreased in January 2024. While OPEC raises expectations for global economic growth in 2024 and 2025, it maintains its forecast for global crude demand growth at 2.2 million barrels per day for the current year.

Financial institutions such as Morgan Stanley have adjusted their price forecasts for Brent crude, anticipating a rise to $85 per barrel due to OPEC's commitment to production cuts. Despite tightening market conditions, robust demand prompts adjustments in forecasts for both demand and supply growth.

Warren Patterson of ING Group NV underscores the importance of OPEC+'s decision on voluntary supply cuts, warning that failure to extend these cuts could result in a surplus in the second quarter of 2024.

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