OPEC trims oil demand as US tariff tensions rattle global market
The Organisation of Petroleum Exporting Countries has marginally reduced its prediction for global oil demand growth in 2025, citing increased economic uncertainty caused by recent US trade moves.In its April Monthly Oil Market Report, OPEC reduced its 2025 demand growth projection to 1.3 million barrels per day, down 100,000 bpd from the previous expectation of 1.4 million bpd. This represents a 150,000 bpd reduction from the previous month's figures.
The change comes after a volatile period in global trade, partly due to sweeping tariffs implemented by U.S. President Donald Trump. Though the sanctions, including those targeting Nigerian exports, have been temporarily suspended for 90 days, they have already had an impact on global markets, causing inflation, lowering consumer confidence, and disrupting manufacturing and trade flows.
Oil markets have reacted to the uncertainty. The price of OPEC's basket of twelve crude oils fell to $66.25 per barrel on Monday, from $70.85 the previous Friday, according to OPEC Secretariat data.
In conjunction with the demand revision, OPEC reduced its global economic growth forecasts. The group now expects the global economy to grow by 3.0% in 2024 and 3.1% in 2025, down from previous projections of 3.1% and 3.2%, respectively.
"The global economy showed a steady growth trend at the beginning of the year; however, recent trade-related dynamics have introduced higher uncertainty to the short-term global economic growth outlook," the economists said.
Despite the negative revisions, OPEC is still more optimistic than other industry observers. The International Energy Agency, for example, predicts that global oil demand will peak this decade as the world shifts towards renewable energy. On Tuesday, the International Energy Agency will provide an update on its prognosis.
Following the announcement of the OPEC report, Brent crude prices remained stable near $66 per barrel, aided slightly by the temporary US tariff reprieve. Still, oil prices have decreased by more than 10% this month.
On the supply side, OPEC+—a coalition of OPEC members and allies—saw a slight decrease in production in March. Crude production fell by 37,000 bpd to 41.02 million bpd, owing to decreases in Nigeria and Iraq. However, Kazakhstan's output grew by 37,000 bpd to 1.852 million bpd, above its quota of 1.468 million bpd. The country's energy ministry confessed to the infraction but promised to comply going future.
The moves follow an April 3 virtual conference of eight important OPEC+ members, including Saudi Arabia, Russia, and the UAE. The group agreed to a combined output rise of 411,000 bpd in May, based on planned increments over three months. However, officials indicated that these hikes may be halted or reversed if market conditions worsened.
OPEC+ will meet again on May 5 to monitor the market and determine output levels for June.
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