As a result of slowing economies, the revival of China’s COVID-19 control measures, and high inflation, OPEC on Wednesday reduced its projection for global oil demand growth in 2022 for the fourth time since April and also decreased its projection for next year.
According to a monthly report from the Organization of the Petroleum Exporting Countries (OPEC), oil demand will rise by 2.64 million barrels per day (bpd), or 2.7%, in 2022, down 460,000 bpd from the previous prediction.
The OPEC’s assessment states that, the global economy has entered a period of increased uncertainty and growing challenges due to persistently high inflation rates, monetary tightening by major central banks, large levels of sovereign debt in many regions, and continuous supply problems.
The prediction for decreased demand provides additional background for last week’s decision by OPEC and its partners, collectively known as OPEC+, to reduce supply to its lowest level since 2020 in order to stabilise the market. The choice was condemned by the US.
Even with the revision, OPEC still anticipates faster demand growth this year and next than the International Energy Agency, which releases its most recent projections on Thursday.
Oil demand will increase by 2.34 million bpd to 102.02 million bpd next year, which is 360,000 bpd less than anticipated. The demand is still anticipated by OPEC to surpass the pre-pandemic pace of 2019 in 2023.
The Organization of the Petroleum Exporting Countries (OPEC) lowered its projection for global economic growth in 2022 from 3.1% to 2.7% and indicated there was a chance for more weakening.
Major downside risks continue to remain, according to OPEC, which also noted that there was only a small chance of an upside from things like fiscal measures in the European Union and China and any peace in the Ukraine crisis.
Following the publication of the study, oil prices, which had been declining due to concerns about the economy, started to decline and were trading below $94 per barrel.
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