OPEC nudges up global oil reserves estimate, despite capex fears

The world's proven crude oil reserves rose slightly year-over-year to 1.567 trillion barrels in 2024, OPEC said July 2, with its members accounting for 79% of that total, as relatively healthy oil prices continued to fuel drilling activity.

In its Annual Statistical Bulletin, the secretariat in Vienna said global crude reserves were 2 billion barrels higher than 2023, marking a 0.1% increase, while its members' proven reserves were steady at 1.241 trillion barrels.

The slight increase comes despite dire warnings from OPEC that calls for a global energy transition would curtain vital investment in oil exploration and production, potentially leading to energy shortages.

OPEC is far more bullish on future oil demand than rival forecasters such as the Paris-based International Energy Agency. Indeed, while the IEA has said oil demand could peak before 2030, OPEC sees consumption rising through 2050.

The producer group noted that 2,489 wells were completed in the oil patches of its 12 core members, with Gulf states Kuwait, Saudi Arabia and the UAE leading the charge. OPEC's African members, who have struggled to reach their production quotas in recent years due to field maturation and underinvestment, saw few wells completed, as did Venezuela, which is subject to US sanctions.

While global reserves edged up, OPEC saw global oil output falling by 770,000 b/d year-over-year in 2024, it said in its report, marking the first annual decrease since the demand-slashing coronavirus pandemic, as OPEC+ supply dips outpaced additional production from its rivals.

The OPEC+ alliance pumped 40.47 million b/d of crude in 2024, a 1.34 million b/d year-over-year fall, the bulletin said.

The group implemented a string of overlapping cuts in 2024 -- with a total of 5.8 million b/d held offline -- in a bid to support prices, amid high production in the Americas, sluggish demand in China and stubborn inflation around the world.

Meanwhile, world oil demand grew by 1.5% year-over-year in 2024, OPEC said, to reach 103.84 million b/d, thanks to consumers in China, India and the Middle East.

Refining capacity also grew in the year, to 103.8 million b/d, with refinery throughput rising 0.6% to 85.97 million b/d, OPEC said.

Price fall

OPEC officials have long insisted that the market is tight, accusing traders and analysts of focusing on sentiment, not fundamentals.

Platts-assessed Dated Brent averaged $80.76/b in 2024, according to data from S&P Global Commodity Insights, as OPEC+ production cuts, driven by kingpin Saudi Arabia, put a floor on prices.

However, Dated Brent has fallen to $71.84/b so far this year, the data shows, with widespread US tariff announcements and quota hikes by the eight OPEC+ countries implementing voluntary cuts prompting fears of a supply overhang.

Accelerated quota increases since May have fueled speculation that OPEC+ has swapped a price defense strategy for a market share approach, even though the Brent forward curve remains in backwardation, suggesting near-term tightness.

Eight countries implementing voluntary cuts are set to meet July 6 to discuss August production levels, while OPEC+ ministers will gather in Vienna on July 9 for a major conference organized by the secretariat.

The bulletin also notes that population levels in OPEC countries rose by 11.6 million year-over-year in 2024, driven by Nigeria, Iraq and Saudi Arabia, suggesting oil demand will keep rising in the countries. The core OPEC 12 saw GDP growth of 2.5% in 2024.

Meanwhile, global proven natural gas reserves fell 1 trillion cubic meters year-over-year in 2024 to 208.9 Tcm, according to the report.