OPEC Trims Oil Demand Growth For 2022, 2023

It cited slowing global growth, resurgence of Covid in China and subsequent containment measures and high inflation to hurt demand

The Organisation of the Petroleum Exporting Countries (OPEC) on Wednesday cut its 2022 forecast for growth in world oil demand and trimmed next year’s figure as well citing slowing global growth, resurgence of Covid in China and subsequent containment measures and high inflation.

“The world economy has entered into a time of heightened uncertainty and rising challenges, amid ongoing high inflation levels, monetary tightening by major central banks, high sovereign debt levels in many regions as well as ongoing supply issues,” OPEC said in the report.

Oil demand will increase by 2.64 million barrels per day (bpd) or 2.7 per cent in 2022, the OPEC said in its October monthly report, down 460,000 bpd from the previous forecast.

On Wednesday, the US Energy Department also lowered its expectations for global output and consumption in 2023.

In 2023, OPEC sees oil demand rising by 2.34 million bpd, 360,000 bpd less than previously forecast, to 102.02 million bpd. OPEC still expects demand in 2023 to exceed the pre-pandemic rate of 2019.

OPEC cut its 2022 global economic growth forecast to 2.7 per cent from 3.1 per cent, trimmed next year’s figure to 2.5 per cent and said there was potential for further weakness.

“Major downside risks still exist,” OPEC said, adding there was a limited upside potential from such factors as fiscal measures in the European Union and China, and any resolution to the Ukraine war.