OPEC lowers call on its crude as it maintains market tightening efforts

OPEC has revised down its estimate of demand for its crude in 2023 and 2024 by 70,000 b/d, but continues to see the oil market tightening significantly up to the end of the year.

In its monthly oil market report, the group said that the so-called call on OPEC crude will average 29.23 million b/d in 2023, rising to 30.2 million b/d in 2024.

The call on OPEC crude is the volume the bloc would have to pump in order to balance global oil supply with demand.

By keeping production below the call, OPEC would induce draws from storage and – all other things being equal – support oil prices.

That appears to be the intent of OPEC and its allies, including Russia, with deep production cuts, including a voluntary extra 1 million b/d cut by kingpin Saudi Arabia from July now extended through the end of the year.

OPEC crude output stood at 27.45 million b/d in August, according to an average of secondary source estimates. If that level is maintained, the market could be some 3 million b/d in supply deficit in the fourth quarter, according to OPEC's analysis.

OPEC maintained its global oil demand growth forecasts at 2.44 million b/d in 2023 and 2.25 million b/d in 2024.

It expects solid global economic growth driven by continued improvements in China to boost consumption and predicts total world oil demand at around 104.3 million b/d in 2024.

The ongoing global economic growth is forecast to drive oil demand, especially given the recovery in tourism, air travel and steady driving mobility, OPEC said in its report, adding that pre-COVID-19 levels of demand will be surpassed in 2023.

A key OPEC+ monitoring committee co-chaired by Saudi Arabia and Russia is scheduled to convene Oct. 4 to review the market outlook, with the full 23-country OPEC+ group -- comprising OPEC's 13 members and 10 allies -- set to meet Nov. 26.

OPEC said it would "continue to assess market conditions, address its challenges and take necessary measures at any time and as needed, in an effort to ensure market stability for the benefit of producers, consumer and the global economy."

OPEC's production rose 113,000 b/d month on month in August, with Iran and Nigeria posting major gains, more than offsetting contractions in Saudi Arabia and Angola, according to an average of secondary source estimates. This followed a fall of 836,000 b/d month on month in July to 27.31 million b/d, after Saudi Arabia implemented a 1 million b/d voluntary crude production cut.

OPEC estimates demand for its crude in the second quarter to be up 300,000 b/d on the year, in the third quarter up 900,000 b/d and in the fourth quarter up 2 million b/d, compared to 2022 levels.

Saudi Arabia reported a 95,000 b/d month-on-month drop in production to 8.918 million b/d in August, according to the report. It has pledged to maintain its latest cut up to the end of 2023, alongside smaller cut commitments from other OPEC+ producers, including Russia.

OPEC revised up its non-OPEC liquids supply growth forecast to 1.6 million b/d in 2023, with the main drivers the US, Brazil, Norway, Kazakhstan, Guyana and China. It maintained its non-OPEC liquids production forecast for 2024 at 1.4 million b/d.