By Alex Lawler

LONDON (Reuters) – OPEC cut its 2024 global oil demand growth forecast for a fifth straight month on Wednesday by the largest amount yet, highlighting China's sputtering role as the world's demand growth engine.

The weaker outlook underscores the challenge facing OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia. Earlier this month, OPEC+ delayed plans to increase output until April 2025 due to falling prices.

In its monthly report, OPEC expects 2024 global oil demand to rise by 1.61 million barrels per day (bpd), down from 1.82 million bpd previously. Additionally, OPEC cut its 2025 growth estimate to 1.45 million bpd from 1.54 million bpd.

This 210,000 bpd cut for 2024 is the largest of the five reductions OPEC has made since August. In July, OPEC had projected a global demand increase of 2.25 million bpd.

OPEC noted, "The bulk of this revision is made in the third quarter, taking into account recently received bearish data for the third quarter." The latest downgrade was partly due to expected demand reductions from China, India, other Asian countries, the Middle East, and Africa. OPEC now estimates Chinese oil demand growth to be 430,000 bpd in 2024, a decrease from the 760,000 bpd forecast in July.

After decades as a leading driver of expanding oil consumption, China’s crude oil imports are expected to peak as early as next year as demand for transport fuel declines for the world’s top crude buyer.

Oil prices fell after the OPEC report, with Brent crude trading below $73 a barrel.

CLOSER TO IEA

Forecasts regarding demand growth for 2024 vary widely, largely due to differing views on Chinese demand and the global transition to cleaner fuels. OPEC's outlook is still on the higher end of industry estimates, contrasting with the International Energy Agency's significantly lower forecast. Nonetheless, recent cuts to OPEC's projections have drawn their outlook closer to that of the IEA.

The IEA projects demand growth of 920,000 bpd in 2024, with an update scheduled for Thursday.

Since late 2022, OPEC+ has enacted a series of output cuts to support prices. Initially set to unwind the most recent cut of 2.2 million bpd starting in January, the group announced on Dec. 5 that it would delay this plan until April 2025 due to ongoing weak demand and increased supply outside the alliance, which continue to exert downward pressure on the market.