OPEC Lowers Global Oil Demand Growth Forecast for Third Straight Month Amid Slowing Fuel Use

Mytrag.com – OPEC has downgraded its global oil demand growth forecasts for the third consecutive month, acknowledging a slowdown in fuel consumption. In its latest monthly report, the Organization of Petroleum Exporting Countries estimates global oil demand will rise by 1.9 million barrels per day in 2024—106,000 barrels less than its previous forecast. The revision reflects updated data and slightly weaker expectations for certain regions.

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Despite the downward adjustments, OPEC’s demand outlook remains more optimistic than projections from Wall Street banks, trading houses, and even Saudi Aramco. The group’s forecast is also roughly double that of the International Energy Agency.

OPEC’s actions signal a growing unease about the global oil market. The group, led by Saudi Arabia, has delayed plans to restore 2.2 million barrels of daily crude production until December, two months later than originally scheduled. Market analysts, including JPMorgan Chase and Citigroup, doubt the group will move forward with these increases due to slowing demand from major consumers like China and rising supplies from other regions, particularly the Americas.

While the recent conflict in the Middle East has supported oil prices, crude is still trading at around $77 a barrel—too low for some OPEC members. The coalition’s efforts to stabilize prices have been complicated by inconsistent production cuts from countries like Iraq, Kazakhstan, and Russia, which continue to pump above their agreed quotas.

Iraq has made some progress toward its target, cutting output by 155,000 barrels per day in September, but still remains above its goal. Kazakhstan increased production by 75,000 barrels, while Russia reduced by 28,000 barrels but also stayed above its ceiling at roughly 9 million barrels a day.

OPEC+ will make a decision on whether to proceed with the planned December production hike in the coming weeks, with a key meeting set for Dec. 1 to discuss output policies for 2025.

U.S. Expands Sanctions on Iran’s Oil Sector Amid Rising Tensions with Israel

Mytrag.com – The U.S. has expanded sanctions on Iran’s oil and gas sectors following a ballistic missile attack on Israel, aiming to cut off funding for Tehran’s military and malign activities. The Treasury Department invoked a Trump-era executive order to broaden sanctions, allowing for actions against any entity linked to Iran’s petroleum and petrochemical sectors. This comes amid concerns of Israeli retaliation, as U.S. officials urged Israel to focus on military targets rather than Iran’s energy sector, fearing global economic consequences.

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The sanctions now cover 17 ships and 10 entities involved in shipping Iranian oil, primarily to China, which has been a major buyer despite U.S. restrictions. Though the U.S. hopes to deter China from purchasing Iranian oil, analysts remain skeptical due to the deeply illicit payment networks in place. While the sanctions mark an escalation, they are seen as a strategic move to exert economic pressure without triggering a broader conflict.

The decision is part of long-standing U.S. efforts to weaken Iran’s military capacity, including its ballistic missile program and funding of proxy militias such as Hamas and Hezbollah. Despite these efforts, Iran has continued to build its missile arsenal, as demonstrated by the missile barrage on Oct. 1. Meanwhile, Israel’s security cabinet is deliberating its next steps, but no decisions have been finalized on how to respond to the Iranian attack.

Southeast Asia’s Growing Role in Global Energy Demand and Transition: IEA Highlights

Mytrag.com – Southeast Asia’s rising demand for oil and gas is set to be a key focus over the next decade, accounting for more than 25% of global energy demand growth, according to Fatih Birol, Executive Director of the International Energy Agency (IEA). Speaking at the Singapore International Energy Week on October 21, Birol emphasized the region’s growing importance in global energy markets, second only to India in terms of growth.

Energy security is a critical concern for Southeast Asia, as about two-thirds of its oil and gas flows through the narrow and strategically important Malacca Strait. Any disruption in these energy flows could have significant consequences for regional economies that heavily rely on imports to meet their energy needs, Birol said.

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Beyond fossil fuels, the region is also pivotal in the clean energy transition. Countries like Vietnam, Malaysia, and Thailand play essential roles in manufacturing solar panels, while the Philippines and Indonesia possess critical minerals vital to electric vehicle production. Birol noted that Southeast Asia is one of the most dynamic regions in the world in terms of energy transition.

To strengthen ties with the region, the IEA opened its first-ever regional office in Singapore. This new IEA Regional Cooperation Centre, inaugurated on October 21, aims to deepen the agency’s collaboration with Southeast Asian countries, supporting them as they navigate energy challenges and opportunities.

The IEA has been engaged in various regional energy initiatives for years, including the Singapore-IEA Regional Training Hub and the IEA-Indonesia Energy Transition Alliance, which was launched to accelerate Indonesia’s energy transition. Birol highlighted the IEA’s ongoing efforts to develop multilateral electricity trade in Southeast Asia, including projects involving Thailand, Laos, Malaysia, and Singapore.

Southeast Asia, home to 685 million people, saw a 5% increase in energy demand in 2023, driven by growing needs in power, transport, and industry. According to the IEA’s 2024 World Energy Outlook, energy affordability and security will remain top priorities for the region as it balances economic growth with emissions reductions.

Saudi Arabia Raises Oil Prices for Asia Amid Middle East Tensions and Global Market Volatility

Mytrag.com – Saudi Arabia, the world’s largest crude exporter, has raised the price of its flagship Arab Light crude for Asia more than expected, amidst high volatility in global oil markets due to escalating tensions in the Middle East. The price hike comes at a time of heightened uncertainty following the ongoing Israel-Iran standoff, which has fueled an 8% rally in oil prices last week.

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Saudi Aramco announced over the weekend that it would increase the price of its Arab Light crude for November deliveries to Asia by $0.90 per barrel, setting it at a $2.20 premium per barrel above the Dubai/Oman benchmark. This price hike surpassed expectations, as refiners and traders in Asia had anticipated a more modest rise of $0.65 per barrel. The Dubai/Oman benchmark is used by Middle Eastern producers to price oil shipments to Asia, their largest market.

While the price was raised for Asia, Saudi Arabia opted to cut the prices of all its crude grades for the U.S. and Europe for the same period. According to ING commodities strategists Warren Patterson and Ewa Manthey, this move may be an effort to regain market share in the European market. They also suggested that the divergent pricing strategies indicate possible regional supply-demand imbalances.

In the previous month, Saudi Arabia had lowered its official selling prices (OSPs) for October to Asia, citing weak refining margins in China and declining Dubai benchmark prices. The price cuts had led to expectations of increased Saudi crude exports to China. However, the latest price increase signals that Aramco may be anticipating stronger demand in Asia moving forward.

This decision comes shortly after OPEC+ announced that it would maintain its current production policy, with plans to start increasing supply in December. The rise in prices also coincides with the growing geopolitical tensions in the Middle East, which have contributed to surging oil prices globally.