Persistently low crude oil prices haven’t spurred rising demand for petroleum products and have begun to impact the global economy, the Organization of the Petroleum Exporting Countries (OPEC) said Wednesday.

OPEC members, which raised instead of lowered output as oil prices began to decline in mid-2014, have failed to agree to any production reduction. And while oil prices usually boost consumer demand for oil products, and more broadly for the global economy, “the overall negative effect from the sharp decline in oil prices since mid-2014 has outweighed benefits in the short term,” OPEC analysts said in the February outlook report.

Last year was “exceptional for oil demand,” said the cartel. Oil consumption reached above 1.5 million b/d, the second highest level in the past 10 years, with 2010 the highest.

“On previous occasions of oil price declines, it was relatively easy to explain that lower oil prices were supportive of the global economy,” OPEC analysts said. “On the positive side, consumers in advanced economies enjoyed greater spending ability and central banks were able to lower interest rates to stimulate their economies.

“On the negative side, the gross domestic product (GDP) shortfall in oil producing economies was usually only relative, given that the size of these economies was small. Thus, on a global level, their GDP shortfall was much less than the positive impact on the GDP of larger oil consuming nations. This time, however, it seems that the overall negative effect from the sharp decline in oil prices since mid-2014 has outweighed benefits in the short-term and there seems to be a ‘contagious’ effect taking place across many aspects of the global economy.”

Investments in the oil sector have become a big factor for GDP growth in recent years and the price decline has had an “important negative impact” on emerging market producers and producer economies in the United States, Canada and the UK. As long as uncertainty in the oil market persists, “investments will be held back” and continue to impact global GDP negatively.

“Contagious deflation,” may be temporary but it is having a negative impact on income growth and spending across all economies, analysts said. “The considerable decline in oil prices is also affecting a wide range of important sectors, including manufacturing or agriculture, further accentuating the trend of low inflation in major economies.”

The contagious effects from low oil prices are obvious, they said. “Already fragile economies have to now deal with severe financial strain. They are either in need of emergency funding, or have started to sell assets in order to meet their spending needs, a factor that is likely to have contributed to the most recent volatility in equity markets.”

The book value of oil-related investments also has eroded over the past 18 months, particularly since oil has become an “important asset class” for investors. As well, the exposure of financial institutions to the oil industry, in the form of loans to small- and medium-sized companies, and the large share of junk bonds from shale producers, has added to concerns.

The expectation that companies will see less cash flow this year has prompted many of them to reduce planned investments and defer major new projects until a sustained price recovery is in place.

“Downsizing of onshore expenditures, particularly in the U.S. tight oil industry, is predicted to further reduce the count of oil rigs and well completions in 2016,” according to OPEC. “Hence, a strong contraction is expected for 2016…”

Two main factors could slow a tight oil production decline in the United States, according to OPEC. The first is the increase in the share of more efficient and higher producing horizontal wells versus vertical and directional wells. The second is the rising number of drilled but uncompleted (DUC) wells.

“In 2015, companies completed more wells than they spudded, yielding an oil DUC of approximately 4,000 wells,” the report said. DUCs are expected to continue to rise through at least June.

OPEC has lowered its 2016 global growth forecast to 3.2% from 3.4%. It also has reduced its oil demand growth forecast by 10,000 b/d for 2016. Demand is now forecast to rise 1.25 million b/d to 94.21 million b/d this year.

However, OPEC output rose 131,000 b/d to 32.33 million b/d in January, driven by higher output from Iran, Iraq, Nigeria and Saudi Arabia. The January output implies a global oil surplus of 1.84 million b/d in 1Q2016.