OPEC Reduces Growth Forecast For Global Oil Demand for 2021

The Organization of Petroleum Exporting Countries (OPEC) has lowered its growth forecast for global oil demand in 2021.

OPEC in its new report said that the global demand for crude oil in the current year is expected to increase by an average of 5.8 million barrels per day as against the initial forecast of a growth of 5.96 million barrels per day as suggested by OPEC experts.

According to the News Agency of Nigeria, this disclosure is contained in OPEC’s monthly report which was published on Wednesday in Vienna.

OPEC in the new report came up with the assumption that 99.82 million barrels of crude oil per day will be needed globally in the fourth quarter.

OPEC experts in their analysis of the likely reason for the possible lower growth forecast, pointed to lower consumption data than expected in the first 9 months of the year.

They said that stronger demand is not expected again until the last quarter of the year, with the experts pointing to the petrochemical industry and higher demand for heating oil.

What you should know
Recall that in June, OPEC in its monthly oil market report said that the global oil demand was expected to increase by around 6% to an average of 96.5 million barrels per day (bpd) in 2021 due to positive mobility developments on the back of easing restriction measures and border openings across the region.

The cartel had also in September revealed that the increased risk of Covid-19 cases has clouded oil demand prospects going into the final quarter, resulting in downward adjustments to fourth-quarter 2021 assessments. As a result, second-half of 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first half of 2022.

Recently, oil prices worldwide have risen sharply and have reached multi-year highest levels above the $80 dollar per barrel mark. The reasons given for the price increase are insufficient supply.

Oil has also become more expensive in the wake of a global gas crisis that has led to rising prices for natural gas. In spite of the rising oil prices, the oil states in the OPEC+ group, an alliance between OPEC and other producers led by Russia and Saudi Arabia, have agreed to raise its daily production by 400,000 barrels in November as planned.