RIYADH: Ongoing geopolitical tensions that are impacting the global economy are likely to persist in 2024 but are expected to ease in 2025, according to a leading think tank. In its latest report, Saudi Arabia’s King Abdullah Petroleum Studies and Research Center stated that geopolitical headwinds are anticipated to create uncertainty in the global economy, leading to potential price hikes. “The clearest result of our semi-annual survey indicates that geopolitical tension will continue in 2024 and relax in 2025,” stated KAPSARC in its report. It added: “Geopolitical tensions tend to create uncertainty and drive speculators toward price hikes and volatility when incidents occur. Their impacts on prices dissipate soon after, though volatility takes longer to calm down. In the recent case of the Israel-Hamas war, the conflict did not drive prices for more than a month despite an increasing number of players entering the war.” The report further highlighted that oil demand for the Organization for Economic Cooperation and Development countries is anticipated to be subdued in the first quarter of this year. According to KAPSARC, these countries are expected to experience a decline in oil demand by 400,000 barrels per day, while demand in non-OECD nations is projected to rise by 650,000 bpd. “Asia will be leading this quarter’s growth for non-OECD countries, especially China at around 620,000 bpd and India at 180,000 bpd,” said KAPSARC. The report continued, stating that oil production is expected to decline in the first quarter of this year as the Organization of the Petroleum Exporting Countries and its allies, known as OPEC, reduce their output to maintain market stability. “However, not including Brazil, OPEC+ only represents 42 percent of the total 610,000 quarter-on-quarter decline. Including Brazil, which became an OPEC+ member in January 2024, the newly constituted OPEC+ would represent 66 percent of the Q1 2024 decline,” added KAPSARC. As per the report, global oil consumption is anticipated to rise by 1.38 million bpd to reach 102.9 million bpd in 2024. The study further indicates that the demand growth rate is expected to accelerate to 2.26 million bpd in 2025. “We are likely at the end of the post-COVID-19 recession era and thus remain optimistic about the possibility of a soft landing and its attendant higher demand,” the report added.