OPEC cuts oil demand forecasts, global price falls to 33-month low

International crude oil prices crashed to a 33-month low on Tuesday, September 10, with the benchmark Brent crude futures sinking below $70 a barrel for the first time since December 2021. This came shortly after the Organisation of Petroleum Exporting Countries and its allies (OPEC+) slashed its global oil demand forecast for this year and 2025.

Brent crude futures were last down $2.33, or 3.24 per cent, at $69.51 a barrel. US West Texas Intermediate crude lost $2.50, or 3.64 per cent, to $66.21. On Monday, both benchmarks had risen about one per cent. In ndia,crude oil futures last traded 4.19 per cent lower at ₹5,534 per barrel on the multi-commodity exchange (MCX).

What's weighing on prices?

On Tuesday, OPEC said in its monthly report that the world oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from last month's forecast for growth of 2.11 million bpd. Until last month, OPEC had kept the forecast unchanged since it was first made in July 2023. OPEC also cut its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd.

Oil prices dipped on weakening global demand prospects and expectations of oil oversupply with the Libya deal and group output. The bearish rut comes despite the OPEC alliance postponing its original plan to add 1,80,000 bpd next month as it gradually restarts output that has been halted since 2022 in a bid to shore up prices.

OPEC output trend

OPEC said this year's demand growth was still above the historical average of 1.4 million bpd seen before Covid in 2019, which caused a plunge in oil use. OPEC has implemented a series of output cuts since late 2022 to support the market, most of which are in place until the end of 2025.

The report said actual production fell in August mainly due to unrest in Libya disrupting output. The OPEC report projects demand for OPEC crude, or crude from OPEC plus (the allied countries working with it), at 43.8 million bpd in the fourth quarter, allowing the group to theoretically increase production.

(By arrangment with livemint.com)