The cartel of world’s largest oil producers Opec has cut its 2025 global oil demand growth forecast on Monday for the first time since December, citing the impact of data received for the first quarter and the tariff measures announced by the United States.
The Organisation of the Petroleum Exporting Countries, in a monthly report, said world oil demand would rise by 1.30 million barrels per day in 2025 and by 1.28 million bpd in 2026. Both forecasts are down 150,000 bpd from last month’s figures.
Trade tariffs announced by the US President Donald Trump as well as a plan for higher output by Opec+, which includes Opec and allies such as Russia, have put downward pressure on oil prices this month and raised concern about economic growth.
Oil prices maintained an earlier gain after the report was released, with Brent crude trading near $66 a barrel following US exclusions on some tariffs, such as China. Prices have still dropped over 10 per cent so far this month.
India, which imports 85 per cent of its energy requirement, stands to gain from a falling oil price, as it brings down the requirement for dollar and help narrow the current account deficit. Price of India’s crude oil basket stood at $65.41 as on April 10.
Earlier this month, oil minister Hardeep Singh Puri suggested public sector oil marketing companies may have the ‘headroom’ for cutting fuel prices if international crude oil prices hover at $65 a barrel.
However, the Centre increased excise duty on petrol and diesel by ₹2 a litre to mop up additional revenue but asked oil companies not to pass on the burden to the consumers. Effectively, the PSU companies are going to share a part of their profit from margins with the government.
Growth in demand for diesel, India’s most consumed petroleum product, fell to its lowest since the pandemic in the financial year ended March 31 as the economy expands at a slower pace and consumption shifts to cleaner fuels.
Diesel consumption rose 2 per cent to 91.4 million tonnes in 2024-25 (April 2024 to March 2025) fiscal, according to provisional data released by the Petroleum Planning and Analysis Cell of the oil ministry.
Economy angle
In the report published by Opec on Monday, it lowered its world economic growth forecast this year to 3.0 per cent from 3.1 per cent and reduced next year’s to 3.1 per cent from 3.2 per cent. Last month, Opec said trade concerns would contribute to volatility but had kept forecasts steady, saying the global economy would adjust.
“The global economy showed a steady growth trend at the beginning of the year, however, recent trade-related dynamics have introduced higher uncertainty to the short-term global economic growth outlook,” Opec said in Monday’s report.
Opec’s oil demand view is still at the higher end of industry forecasts and it expects oil use to keep rising for years, unlike the International Energy Agency, which sees demand peaking this decade as the world switches to cleaner fuels. The IEA is scheduled to update its oil demand forecasts on Tuesday.
Kazakhstan output up
Opec’s report also showed that crude production by the wider Opec+ fell in March by 37,000 bpd to 41.02 million bpd due in part to reductions by Nigeria and Iraq.
The group is scheduled to raise output in April and again in May as part of a plan to unwind its most recent layer of oil output cuts, which were put in place to support the market.
But the report also showed, ahead of the scheduled hikes, that Kazakhstan, which has persistently exceeded its Opec+ output target, increased production further in March by 37,000 bpd, breaching the restrictions again.