Saudi Aramco Predicts Increase in Oil Demand in Second Half of 2024

Oil Demand Expected to Rise

Saudi Aramco's CEO, Amin Nasser, stated on Tuesday that he anticipates global oil demand to increase by 1.6 to 2 million barrels per day (bpd) in the second half of the year. He added that the recent drop in oil prices doesn't accurately represent the market's fundamentals.

Full-Year Forecast

Nasser, who leads the world's largest oil company, predicts that total global oil demand for the full year of 2024 will reach 104.7 million bpd. He shared this information during the company's second-quarter earnings call. Some market analysts are even expecting global oil demand to exceed 106 million bpd in the second half of the year.

Comparing Projections

Saudi Aramco's demand growth projection for this year aligns more closely with OPEC's estimates than with those of the International Energy Agency (IEA). The IEA has expressed concerns about weak Chinese consumption potentially impacting oil demand growth this year.

IEA vs OPEC Forecasts

In the previous month, the IEA maintained its cautious forecast for global oil demand growth for this year and next, predicting an increase of 970,000 bpd in 2024 and 980,000 bpd in 2025. This estimate significantly differs from OPEC's, which expects global oil demand growth in 2024 to be 2.2 million bpd.

Upcoming Announcements

Both the IEA and OPEC are expected to announce any changes to their demand forecasts in their August monthly reports. These announcements will follow several turbulent weeks in the markets.

Current Market Conditions

Oil prices have plummeted to their lowest point since January, with Brent dropping to $76 per barrel. This decrease is due to growing concerns about a potential US recession and weak oil demand in China. These factors have erased some of the price increase caused by escalating tensions between Israel and Iran.

Market Overreaction

Despite these conditions, Nasser believes that the market is overreacting to bearish demand signals. He stated, "The market in my view is overreacting and the fundamentals do not support the drop in prices that we are witnessing today."

Bottom Line

While oil market predictions can vary greatly, it's clear that Saudi Aramco's CEO believes in a strong recovery in the second half of 2024. However, only time will tell if this optimistic forecast will come to fruition. What are your thoughts on this matter? Do you agree with Nasser's outlook on the oil market? Share this article with your friends and let us know your views. And don't forget, you can sign up for the Daily Briefing, which is delivered every day at 6pm.