- Reduces demand growth in 2022 from 3.1 million bpd to 2.64 million bpd
- Demand in 2023 will still exceed pre-pandemic levels
- OPEC September production rises 146,000 bpd, led by Saudi
LONDON, Oct 12 (Reuters) – OPEC on Wednesday cut its forecast for 2022 global oil demand growth for the fourth time since April and also slashed the figure for next year, citing slowing economies the resurgence of China’s COVID-19 containment measures and high inflation.
Oil demand will rise by 2.64 million barrels per day (bpd), or 2.7%, in 2022, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report, down 460,000 bpd from the previous forecast.
“The global economy has entered a period of heightened uncertainty and growing challenges amid persistently high inflation rates, monetary tightening by major central banks, high levels of public debt in many regions, and ongoing supply concerns,” OPEC said in the report.
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The lower demand outlook gives additional context to last week’s move by OPEC and its allies, known as OPEC+, to make their biggest production cut since 2020 to prop up the market. The US criticized the decision.
Even after the downgrade, OPEC expects demand growth to be stronger this year and next than the International Energy Agency, which released its latest forecasts on Thursday.
Next year, OPEC expects oil demand to increase by 2.34 million bpd, down 360,000 bpd from previously forecast, to 102.02 million bpd. OPEC continues to expect demand in 2023 to exceed the 2019 pre-pandemic rate.
OPEC cut its forecast for 2022 global economic growth to 2.7% from 3.1%, lowering the figure for next year to 2.5% and saying there was potential for further weakness.
“Major downside risks remain,” OPEC said, adding that there is limited upside potential due to factors such as fiscal measures in the European Union and China and a resolution to the Ukraine war.
Oil prices, which had weakened in response to economic concerns, fell after the report was released, trading below $94 a barrel.
INCREASE IN SUPPLY
OPEC+ has ramped up oil production for most of this year in a bid to reverse record cuts introduced in 2020 after the pandemic sapped demand.
The group’s decision for September 2022 saw an increase in its production target by 100,000 bpd, of which about 64,000 bpd would come from the 10 participating OPEC countries.
The report showed that OPEC production rose 146,000 bpd to 29.77 million bpd in September, led by Saudi Arabia and Nigeria.
Nevertheless, OPEC produces far less than required by the OPEC+ agreement, as some members invest too little in oil fields.
OPEC expects global demand for its crude to average 29.4 million barrels per day next year, down 300,000 barrels per day from last month and implying a surplus of 370,000 barrels per day if the Production will continue at the September rate and other things remain the same.
Still, the OPEC+ production cut agreed last week applies to all of 2023 and is much larger at 2 million bpd.
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Reporting by Alex Lawler; Edited by Bernadette Baum
Our standards: The Thomson Reuters Trust Principles.
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