March 3, 2024
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OIL & GAS RENEWABLE ENERGY

OPEC to Face Weak Demand in 2024

OPEC is facing a decline in demand for its crude in the first half of 2024 just as its global market share declines to the lowest since the Covid-19 pandemic on the back of output cuts and member Angola’s exit, according to Reuters calculations and data from forecasters.

This obviously means that unless the global oil demand accelerates or OPEC is prepared to accept lower oil prices, the group will struggle to ease production.

The decision Angola took to leave OPEC, will leave the group with only 12 members. Ecuador left in 2020, Qatar in 2019 and Indonesia in 2016. This takes its production to below 27 million barrels per day (bpd) – less than 27% of the total global supply of 102 million bpd, according to Reuters.

The last time OPEC’s market share fell to 27% was during the 2020 pandemic, when global demand dropped by 15-20%. Global demand has since then recovered to record levels, meaning OPEC has lost market share to rivals, as reported by Reuters.

Founded by Saudi Arabia together with Venezuela, Iran, and Iraq in 1960, OPEC was joined by Angola in 2007. It has since then worked with Russia and other non-members as part of the OPEC+ group to manage the market. It was later joined by some small players, Gabon in 2016, Equatorial Guinea in 2017 and Congo in 2018.

The group produced around half of global crude in the 1970s. In later decades, OPEC’s share stood at between 30% and 40%.

As of November 2023, OPEC’s crude oil output accounted for 27.4% of the total market, down from 32-33% in 2017-2018, according to figures from the group’s monthly reports.

Its latest World Oil Outlook predicts the group’s total share of the oil market rising to 40% in 2045 as non-OPEC output starts declining from the early 2030s.

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