Global oil demand in 2022 is gathering pace to exceed pre-pandemic levels, the Organization of the Petroleum Exporting Countries (OPEC) said Monday.
In its Monthly Oil Market Report, the cartel said the Covid-19 Delta variant put a crimp in forecasts for the second half of 2021. However, economic growth worldwide in 2021 and 2022 remains unchanged from an assessment in August.
OPEC expects the global economy overall to grow at a rate of around 5.6% in 2021, with growth of 4.2% in 2022.
“Oil demand in 2022 is now projected to reach 100.8 million b/d, exceeding pre-pandemic levels,” the OPEC researchers said.
There are some warning signs, however. The forecast robust growth “continues to be challenged by uncertainties such as the spread of Covid-19 variants and pace of vaccine rollouts worldwide, as well as ongoing global supply-chain disruptions,” the researchers said. “Additionally, sovereign debt levels in many regions, together with inflationary pressures and central bank responses, remain key factors requiring close monitoring.”
Based on current economic factors, OPEC kept its U.S. growth forecast unchanged, with 6.1% growth for 2021 and 4.1% for 2022. Europe’s growth also remained at 4.7% for 2021 and 3.8% for 2022. Likewise, the forecast for Japan was unchanged at 2.8% for 2021 and 2.0% in 2022, while China’s economy is expected to grow at an 8.5% rate in 2021 and 6% in 2022.
Global oil demand growth in 2021 remained unchanged from last month’s assessment at 6.0 million b/d.
Worldwide demand in 3Q2021 “has proved to be resilient, supported by rising mobility and traveling activities,” particularly in the developed economies, researchers said. “At the same time, the increased risk of Covid-19 cases, primarily fueled by the Delta variant, is clouding oil demand prospects going into the final quarter of the year,” the researchers said.
OPEC has adjusted its 4Q2021 global oil estimates down. Researchers expect consumption in the second half of this year to be “slightly lower, partially delaying the oil demand recovery” into the first half of 2022.
“Global oil demand in 2021 is now estimated to average 96.7 million b/d,” the researchers said. Still., oil consumption for 2022 “is expected to robustly grow by around 4.2 million b/d, some 0.9 million b/d higher compared to last month’s assessment.”
Oil supply outside of the OPEC countries was revised lower by 0.17 million b/d because of a 0.5 million b/d downward adjustment for 3Q2021.
The revisions follow shortfalls during 3Q2021 from two events in the Gulf of Mexico. OPEC pointed to the fire on a Mexico offshore platform that caused petroleum shortages. In addition, there have been continued “disruptions caused by Hurricane Ida,” researchers said.
After Ida crashed ashore in Louisiana late last month, it left in its wake massive oil production cuts as companies struggled to restart offshore platforms amid damage, flooding and power outages, according to the U.S. Energy Information Administration (EIA). U.S. production for the week ended Sept. 3 dropped to 10.0 million b/d from 11.5 million b/d during the prior week, according to EIA’s Weekly Petroleum Status Report.
According to OPEC, the main drivers for global oil supply growth this year continue to be Brazil, Canada, China, Norway, Russia and the United State. The United States, it said, is expected to see year/year growth this year of “only 0.08 million b/d.”
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