Jean-Pierre Durante, Head of Applied Research Pictet Wealth Management.
A market dominated by demand from emerging economies
- As the energy transition gathers pace, demand for combustible fossil fuels is expected to peak this decade. The demand for car fuel could peak soon, followed by other transport fuels around the middle of this decade.
- By contrast, total oil consumption is likely to continue to grow through 2028 due to continued expansion in the demand for petrochemicals.
- The expansion in global oil demand next year is likely to be powered by faster-growing economies in the developing world, especially in Asia.
- Global oil demand is expected to increase by 1.5 mbd in 2024, down from a forecast 2 mbd in 2023 as world GDP growth moderates to 2.8% from 3.0% in 2023.
- However, there will be considerable divergence between demand contraction in advanced economies (-0.2 mbd next year) and a 1.7 mbd increase in oil demand in emerging economies.
- We see 1.3 mbd of additional supply coming from outside the OPEC+ cartel in 2024, notably from US, Brazil and Guyana. As a result, the OPEC+ countries will need to extend voluntary production cuts to support prices at their current level.
- As additional supply from non-OPEC+ comes on stream during the year, the global oil market is expected to become oversupplied by the end of 2024.
- The oil price is expected to remain supported at close to USD90 per barrel (for Brent crude) in H1 thanks to increased demand from emerging economies, notably China, before declining towards USD80 by the end of next year.
- Higher and earlier additional supply than expected from non-OPEC+ oil producers is one of the main risks to our central scenario. A disappointing Chinese recovery is also an important risk to consider. Overall, our central forecast for the oil price faces downside risk.
