New Delhi: The Organization of the Petroleum Exporting Countries has slashed its estimate for global crude oil demand this year and the following year due to extension of Covid-19 lockdowns and new curbs in China, an economic retard in Europe, and inflation in key economies.
According to the cartel's Monthly Oil Market Report, OPEC lowered its estimate for global oil demand growth in 2022 by 500,000 barrels per day, to 2.6 million barrels per day. It also lowered its estimate for crude oil demand growth next year by 400,000 barrels per day, to 2.3 million barrels per day. In the past few weeks, fears of a recession have made people less interested in buying oil.
New lockdowns in China have added to worries that the world's largest oil importer will use less oil. OPEC countries are expected to need 28.7 million barrels per day (bpd) of crude oil in 2022. This is 200,000 bpd less than what was thought before. The number of barrels of oil per day (bpd) that OPEC thinks will be needed next year was cut by 400,000 bpd from the last report. As for supply in 2022, the cartel has cut its estimate for growth in crude oil production outside of OPEC by 200,000 bpd, to 1.9 million bpd.
"Looking ahead, and despite the usual seasonal rise in oil demand for heating, the challenges of high levels of uncertainty, slowing economic growth, and a possible return of COVID restrictions in China and other places are expected to affect oil demand in 2022 and 2023," the cartel said. OPEC also said that OPEC+'s decision last week to cut 2 million bpd from its target production level was a proactive move made "in an ongoing and relentless effort to provide a sustainable stability to the market.", the OPEC said.
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