Global oil markets

Global oil prices and inventories
The Brent crude oil spot price averaged $76 per barrel (b) in October, up $2/b from the average in September. Crude oil prices increased in October in part because of market concerns that an Israeli response to Iran’s missile attack on October 1 would reduce Iran’s ability to produce or market oil. However, Brent fell to $71/b on October 29 after Israel’s military response did not target Iran’s oil infrastructure.

Despite the drop in oil prices in late October, we still expect that ongoing withdrawals from global oil inventories stemming from OPEC+ production cuts, along with potential for further geopolitical risk, will put upward pressure on oil prices through the first quarter of 2025 (1Q25). We estimate that global oil inventories fell by 0.9 million barrels per day (b/d) in 3Q24, and we estimate they will fall by an average of 0.3 million b/d in 4Q24 and 1Q25. As a result, we expect the Brent price will rise from $72/b on November 11 to an average of $78/b in 1Q25.

By 2Q25, we expect OPEC+ production increases and supply growth from countries outside of OPEC+ will outweigh global oil demand growth and cause oil to be put into inventory. We expect that global oil inventories will increase by an average of 0.4 million b/d in 2Q25, before inventories rise by an average of 0.6 million b/d in the second half of 2025 (2H25). We forecast that inventory builds will put downward pressure on crude oil prices, with Brent falling to an average of $74/b in 2H25. In our forecast, the Brent price averages $76/b for the full year of 2025.

We see at least two main sources of oil price uncertainty: the future course of the ongoing Middle East conflict and OPEC+ members’ willingness to adhere to voluntary production cuts. First, although the volatility and risk premium associated with the conflict in the Middle East has moderated in recent weeks, the duration and severity of the ongoing conflict remain uncertain, as is the potential for escalation to reduce oil supplies. Second, although we assess that OPEC+ producers will likely continue to limit production below recently announced targets in 2025, the potential for weakening commitment among OPEC+ producers to continue cutting production adds downside risk to oil prices.

Global oil production and consumption
Despite pledges by OPEC+ members to restrict oil production, crude oil prices have been relatively flat this year because of weak growth in oil demand. We forecast that global consumption of liquid fuels will increase by 1.0 million b/d in 2024 and 1.2 million b/d in 2025, which are both below the pre-pandemic 10-year average of 1.5 million b/d of annual growth, as well as below the oil demand growth seen in the pandemic recovery from 2021 to 2023.

Non-OECD countries drive almost all global oil consumption growth in our forecast. Much of this growth is in Asia, where India is now the leading source of global oil demand growth in our forecast. We expect consumption of liquid fuels in India to increase by 0.3 million b/d in both 2024 and 2025, driven by rising demand for transportation fuels. We forecast China’s petroleum and liquid fuels consumption will grow by less than 0.1 million b/d in 2024 before recovering to almost 0.3 million b/d 2025. We have revised China’s 2024 consumption downward several times over the past year. In China, rapidly expanding electric vehicle ownership, rising use of liquefied natural gas for trucking goods, and decelerating economic growth have limited consumption growth for transportation fuels.