Home Business Oil, OPEC goes against the tide with respect to the IEA: 2022 demand estimates down due to global economic slowdown

Oil, OPEC goes against the tide with respect to the IEA: 2022 demand estimates down due to global economic slowdown

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Oil, OPEC goes against the tide with respect to the IEA: 2022 demand estimates down due to global economic slowdown

OPEC cut its forecast of global oil demand growth in 2022 for the third time since April, citing the economic impact of the war in Ukraine, inflationary pressures and efforts to contain the coronavirus pandemic.

The view of the Organization of Petroleum Exporting Countries contrasts with that of the International Energy Agency, which raised its prospects on demand on Thursday.

OPEC in the monthly bulletin said it expects an increase in oil demand in 2022 by 3.1 million barrels per day, or 3.2%, down 260,000 barrels per day from the previous forecast. While the organization has left unchanged the growth projections for 2023 a 2.7 million barrels per day.

Oil consumption has rebounded from 2020 lows and is set to surpass 2019 levels this year even after prices hit record highs. However, high crude oil prices and recent lockdowns in China have dented growth projections for 2022.

“The fundamentals of the global oil market continued their strong recovery from pre-COVID-19 levels for most of the first half of 2022, although signs of slowing global economic growth and oil demand emerged,” OPEC said in the monthly bulletin.

OPEC cuts economic growth estimates in 2022

OPEC has reduced its global economic growth forecasts for 2022 to 3,1% from 3.5% and for 2023 a 3,1%, stating that the prospect of further weakness remained.

“This is still solid growth, when compared to pre-pandemic growth levels, which were on average only slightly higher and not burdened by the current potentially impacting problems,” OPEC said. “Therefore, it is obvious that a significant downside risk prevails.”

The price of oil maintained its gains in percentage terms after the publication of the bulletin, shortly after 16:00 WTI prices 93 dollars per barrel (+ 1.6%) and Brent at 98.30 dollars per barrel (+ 1.4%).

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OPEC and its allies, including Russia, collectively known as OPEC +, are ramping up oil production following record cuts following the outbreak of the pandemic in 2020. OPEC + has failed to fully deliver in recent months. the expected increases in production due to insufficient investment in oil fields by some members of the oil-producing cartel and the decline in Russian production.

The bulletin also showed that Opec production in July increased by 162.000 barrels per day to 28.84 million barrels per day.

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