OPEC sticks to oil demand forecast but flags fiscal concerns, lingering trade uncertainty
The Organization of the Petroleum Exporting Countries pointed to high debt levels in key economies and tariff uncertainty as areas of concern.
The Organization of the Petroleum Exporting Countries left its oil-demand forecasts steady as it works to revive more production, but pointed to fiscal concerns and persistent trade uncertainties.
The Vienna-based cartel expects global oil demand to grow by 1.3 million barrels a day this year and 1.38 million barrels a day the next, as robust economic activity boosts transportation fuels.
Global economic growth estimates were also maintained at 3% and 3.1% for the respective periods, though OPEC said “concerns about high debt levels in key economies and U.S. debt yields call for close monitoring in the near term."
Meanwhile, “the U.S.’s recent indication that it may reimpose tariffs of up to 100% on Chinese imports has once again underscored the lingering uncertainty surrounding trade policy," the group said.
Brent crude traded above $63 a barrel on Monday, while West Texas Intermediate hovered around $59 a barrel following President Trump’s conciliatory words about China two days after saying he would impose an additional tariff on imports from Beijing.
However, further gains are limited by an easing geopolitical risk premium in the Middle East after a cease-fire in Gaza and the release of Israeli hostages by Hamas under a U.S.-brokered agreement.
In September, overall OPEC crude-oil production rose by 524,000 barrels a day to 28.44 million barrels a day, led by a 248,000-barrel-a-day increase in Saudi output, the cartel said. Total production by OPEC+ members rose by 630,000 barrels a day to 43.05 million barrels a day.
Earlier this month, OPEC+ members said they would boost production by 137,000 barrels a day in November—the same as in October—staving off market fears of a supersized hike amid concerns over a looming supply surplus.
The group of oil producing countries had already started to unwind a layer of production cuts totaling roughly 1.65 million barrels a day that was first implemented in 2023. An earlier layer of production curbs totaling 2.2 million barrels a day had been fully rolled back in September, a year ahead of schedule.
Eight key members of the alliance are now scheduled to meet on Nov. 2 to discuss December production levels.
Crude prices haven’t fallen as much as expected since OPEC+ started increasing production in April, with a buildup of oil stockpiles in China helping offset weaker demand growth and absorbing some of the additional supply, according to market watchers.
Meanwhile, only about half of the pledged OPEC+ supply increase is expected to hit the market, as some members still have to compensate for past overproduction, while others face capacity constraints.
Supply from producers outside of the wider OPEC+ alliance is still expected to rise by 810,000 barrels a day this year and 630,000 barrels a day the next—unchanged from previous projections—driven by the U.S., Canada, Brazil and Argentina, the cartel said in its latest report.
Write to Giulia Petroni at giulia.petroni@wsj.com
topics
