OPEC oil prices fall to 3-year low on weak global demand

Global oil prices from members of the Organization of the Petroleum Exporting Countries (OPEC) have dropped to a 3-year low of $73.42 per barrel in November 2024 amid weak demand from major buying countries.

The OPEC Reference Basket (ORB) figures for this month are the lowest since August 2021 months before Russia’s invasion of Ukraine, when prices averaged $70.33 per barrel. The OPEC Basket is a weighted average of oil prices from the different OPEC members around the world.  

OPEC members are Algeria, Angola, Ecuador, Gabon, Iraq, Iran, Qatar, Kuwait, Libya, Nigeria, Saudi Arabia, Venezuela, and the United Arab Emirates (UAE). The basket is a benchmark, or reference point, for those monitoring the oil price and the stability of the global oil market.

In a monthly report released last week, OPEC said world oil demand will rise by 1.93 million barrels per day in 2024, down from growth of 2.03 million bpd it expected last month. Until August, OPEC had kept the forecast unchanged since it was first made in July 2023. China accounted for the bulk of the 2024 downgrade, Reuters reported. OPEC also revised downwards global oil demand growth for 2025 by 103 tb/d from the previous month’s assessment to 1.5 mb/d, year-on-year.

This minor adjustment is mainly due to updated data for 1Q24, 2Q24 and 3Q24. OECD oil demand is expected to grow by around 0.2 mb/d, while non-OECD demand is forecast to expand by close to 1.7 mb/d

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As of December 2020, the OPEC Basket averaged the prices of crude oils from thirteen member states namely Saharan Blend from Algeria, Girassol from Angola, Djeno from Congo, Zafiro from Equatorial Guinea, and Rabi Light from Gabon. Iran Heavy, Basra Light from Iraq, Kuwait Export, and Es Sider from Libya were also part of the basket. Others are Bonny Light from Nigeria, Arab Light from Saudi Arabia, Murban from the United Arab Emirates, and Merey from Venezuela.

The OPEC Basket has been trending downwards in recent months as the global economic turmoil particularly in China, which is a leading buyer of oil, drove down demand. Global oil demand is also predicted to grow below previous estimates. OPEC has tipped the global economy to grow by 3.1% in 2024 and 3.0% in 2025. It revised US economic growth forecast for 2024 to 2.7%, reflecting robust growth in 2Q24 and 3Q24. For 2025, the US growth forecast was also revised up to 2.1%.

OPEC kept Japan’s growth forecastsunchanged at 0.1% for 2024 and 0.9% for 2025. Similarly, the it kept the Eurozone’s economic growth forecasts unchanged at 0.8% and 1.2% in 2024 and 2025, respectively. China’s economic growth forecast for 2024 were also unchanged at 4.9%.

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