## OPEC Cuts Oil Demand Forecast, Prices Dip as China Concerns Linger
Oil prices took a tumble on Monday, dropping more than 2%, as the Organization of the Petroleum Exporting Countries (OPEC) slashed its global oil demand growth forecast for the third month in a row. The cartel’s downward revision, based on actual consumption data from earlier this year and slightly reduced demand expectations for certain regions, fueled the decline.
West Texas Intermediate (WTI) light crude, a key U.S. benchmark, fell by 2.2% to just below $74 a barrel, following a 0.4% drop in crude prices last Friday. The lack of concrete details regarding Chinese fiscal stimulus also dampened investor sentiment, impacting broader commodity markets beyond oil.
OPEC’s Lowered Forecast
In its latest Monthly Oil Market Report released on Monday, OPEC reduced its 2024 oil demand growth estimate by 106,000 barrels per day (bpd), now expecting global demand to increase by 1.93 million bpd next year. The forecast for 2025 demand growth was also trimmed by 102,000 bpd to 1.6 million bpd year-over-year.
This revision brings the expected total global oil demand in 2024 to 105.8 million bpd. While the forecast acknowledges the potential for increased demand from developing economies in Asia and the Middle East (expected to contribute 1.5 million bpd to the 1.6 million bpd growth in 2025), OPEC also expressed concerns about slowing demand in China.
“Worries of slowing demand in China persisted amid weak refining margins and the prospect of the Autumn refinery maintenance season,” the report noted.
Iranian Crude Production in Focus
According to secondary source data in OPEC’s report, Iran’s crude oil production climbed to 3.3 million bpd in September. This represents an increase from 3.18 million bpd in the first quarter of the year, 2.68 million bpd in 2023, and 2.55 million bpd in 2022.
Helima Croft, an analyst at RBC Capital Markets, highlighted the Biden administration’s focus on maintaining oil market supply and keeping retail gasoline prices stable, despite their climate action agenda. However, she raised concerns about the effectiveness of U.S. sanctions on shipping companies and trading houses involved in Iranian oil trade in limiting Tehran’s exports.
“Prime Minister [Benjamin] Netanyahu may judge that Washington is not sufficiently serious about restricting Iranian exports at this juncture,” Croft said, suggesting potential for increased conflict and further destabilization of global energy markets. This could escalate the situation and impact energy markets.
Tensions Escalate in the Middle East
Meanwhile, tensions in the Middle East continued to escalate. Israel intensified its military operations against Hezbollah militants in Lebanon, with an airstrike in northern Lebanon resulting in the deaths of at least 21 people. On Sunday, two Israeli Merkava tanks entered a base of the U.N. Interim Force in Lebanon (UNIFIL), destroying the base’s main gate. Shells exploding near the base released smoke that sickened U.N. personnel.
Netanyahu called on U.N. Secretary-General Antonio Guterres to pull UNIFIL peacekeepers from Hezbollah-controlled areas and combat zones, claiming that their refusal to withdraw effectively turned them into human shields for Hezbollah militants. Guterres responded by stating that UNIFIL personnel and its premises must never be targeted and that attacks against peacekeepers are a violation of international law.
In Gaza, an Israeli air strike on Al-Aqsa Hospital in Deir Al-Balah killed three and injured 40, according to medics. The Israeli military claimed to have targeted militants, while Hamas denies using civilian facilities for military purposes.
