Weak demand in China may force OPEC+ to cut oil production

OPEC+ may return to reducing oil production in June if demand in China is below forecasts. Since April, the alliance has begun gradually lifting voluntary restrictions on 2.2 million barrels per day, which were in effect for a year and a half for eight countries, including Russia and Saudi Arabia. 

However, an overproduction compensation plan was presented for most of the participants, except Algeria. As a result, production increased by only 88,000 barrels per day in April, which is lower than expected.

The results of the first half of the year will be key for further decisions. If China continues to reduce oil purchases, the alliance may return to restrictions in the summer. 

China and India remain the main drivers of global demand, but China's growth rate is slowing. In 2024, Beijing provided 500,000 bpd of additional demand, which accounted for a third of the total increase, although previously this share reached half. 

This year, it is expected that the demand for oil in the Chinese market will be at the level of 300 thousand bpd. India, on the contrary, will increase its consumption at about the same level – 300 thousand b/d, but so far this is not enough to compensate for the slowdown in demand growth in China.