Oil Market Report: Q4 2024

President Trump’s energy policy is driven by a determination to revitalise US manufacturing on the basis of abundant low-cost energy from any source; this approach is set to have a range of major impacts, including:

These policies, while in force, can be expected to put downward pressure on global oil prices.

Chinese economic growth again coming under close scrutiny

Chinese growth continues to be the single most-watched indicator with the potential to drive crude oil demand. Market observers were pessimistic in Q4, however, the Xi government held that the economy would grow at around 5% and announced new stimulus measures. Nevertheless, the gloomy outlook helped dampen oil prices in the quarter. Demand in China for gasoline is dropping, in part due to new EV sales which reached 1.6 mln in December, up 42% y-o-y. Car sales in China for December stood at 3.5 million. Meanwhile, heavy trucks are steadily converting to LNG-fuel, leading to what may be a peak in diesel fuel demand in 2024. Reflecting in part these vehicle fuelling shifts, Chinese crude imports in 2024 were on average down 200,000 bopd vs 2023.

OPEC again cuts crude demand forecasts

In December, for the fifth consecutive month, OPEC slashed its forecast for global crude oil demand growth in both 2024 and 2025, partly to reflect weaker Chinese consumption. Its annual increment now sits at 1.45 mmb/d. By comparison the IEA’s demand growth is 940 kb/d in 2024 and 1.05 mmb/d in 2025. Furthermore, the IEA forecasts that the global oil supply could exceed demand by 1 million b/d in 2025, driven by supply growth from the US, Guyana, and Canada. In the face of this market weakness, OPEC+ continues to push back a series of monthly supply increases, despite calls from President Donald Trump to increase supplies and lower prices.

India’s role in the global oil market should not be underestimated

India, now with the world’s largest population, the fifth-largest economy (as ranked by the IMF), the fastest-growing large economy (annual figures of 6% or more), and the third-largest oil importer (4.8 mmbo/d), plays a major role in the global oil market. Also, Hardeep Puri, India’s Oil Minister, has stated that the country will see rising fossil fuel demand until at least 2040, will need to raise refining capacity by 80% (to 9 million b/d), and only meet a net zero target by 2070. It remains to be seen whether Indian demand growth can offset possible continued declines in Chinese demand growth. And to put the Indian import figures into context, Chinese crude imports are more than 11 mmbo/d.

Libya gets back to work?

In Q4 2024 Libyan oil production reached 1.422 mmbo/day, levels not seen since 2013. The NOC announced plans to reach 2.0 mmbo/d by the end of 2026, and a licensing round was announced for early 2025, the first such activity since 2007. Meanwhile, international majors such as Eni BP, OMV, and Repsol announced a return to work in the onshore oil basins after an absence of over 10 years. Such activities, if fully realised, could bring unexpected new crude oil volumes to the market and place further downward pressure on oil prices.

The start of 2025 bore witness to a new reality: oil and gas will play a major role in the global energy mix for far longer than was previously postulated. The more successful oil companies have accepted this new reality and are focusing growth on exploration for high potential targets, with a renewed emphasis on developing reserves and production in core areas to improve the quality and longevity of their upstream portfolios.

Meanwhile, companies too committed to renewable energy programmes and carbon transition policies are reverting to growing their more profitable oil and gas value chain – Tenet is advising and assisting a number of such companies in this vital area.