OPEC lowered its prediction for global oil demand growth in 2022 on Tuesday, citing the impact of Russia’s invasion of Ukraine, growing inflation as crude prices rise, and the comeback of the Omicron coronavirus type in China as reasons.
The Organization of Petroleum Exporting Countries (OPEC) indicated in a monthly report that global demand will climb by 3.67 million barrels per day (bpd) in 2022, down 480,000 bpd from its previous prediction.
Oil prices soared above $139 a barrel in February, the highest since 2008, exacerbating inflationary pressures. Crude has subsequently declined as the US and other countries revealed intentions to use strategic oil reserves to enhance supplies, but it still trades above $100.
‘While both Russia and Ukraine are expected to have recessions in 2022, the rest of the world economy will be severely damaged,’ OPEC warned in the report.
‘Global inflation is being fueled by a sharp rise in commodity prices, as well as continued supply-chain constraints and COVID-19-related logistical delays in China and elsewhere.’
Despite this, world oil consumption is anticipated to exceed 100 million barrels per day in the third quarter, as forecast by OPEC. According to OPEC, the world utilised more than 100 million barrels per day of oil in 2019.
OPEC said inflation was the main factor affecting the global economy, and it decreased its growth prediction for this year to 3.9 percent from 4.2 percent, with the possibility of a further cut.
‘Further negative risks to this prognosis are projected to be significant, amounting to more than half a percentage point, especially if the current scenario persists or worsens until the second half of 2022,’ according to the research.
After the report was issued, oil prices gained momentarily. The prices rose $5 to more than $103 by 1325 GMT.
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