OPEC left on Tuesday its oil demand growth view unchanged but warned that Russia’s war in Ukraine and the spiraling inflation could this year impact oil consumption growth, which “remains under assessment.”
In its closely watched Monthly Oil Market Report today, OPEC left its outlook of global oil demand growth at 4.2 million barrels per day (bpd), “for the time being”, but flagged “the extremely high uncertainty surrounding global macroeconomic performance.”
“However, this forecast is subject to change in the coming weeks, when there is more clarity on the far-reaching impact of the geopolitical turmoil,” OPEC said.
The cartel still expects world oil demand to exceed pre-pandemic levels on average this year, and even raised the full-year oil demand estimate to 100.9 million bpd from 100.8 million bpd in last month’s report with Q4 2022 demand upped to 103.24 million bpd from 102.92 million bpd expected in February.
Despite the slightly higher estimate for global oil demand, OPEC stressed throughout its report that “it is clear that uncertainty will dominate in the remaining months of 2022.”
“Given this unprecedented level of uncertainty, the forecast for total global oil demand growth for 2022 also remains under assessment at 4.2 mb/d, until more clarity prevails,” the cartel said.
The war in Ukraine has led to a number of issues, including rising commodity prices, which are further escalating global inflation, and disrupted trade flows and transportation logistics, which are partly offsetting the gradual easing of global supply chain bottlenecks, according to OPEC.
“Thereby, the effects of the conflict and especially the impact of rising inflation, if sustained, will lead to a decline in consumption and investments to varying degrees,” OPEC warned.
In terms of production, OPEC raised its February crude oil output by 440,000 bpd to 28.473 million bpd, led by a 141,000-bpd increase in top producer Saudi Arabia. The second-largest increase, however, came at 105,000 bpd from Libya, which is exempted from the OPEC+ deal.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- U.S. Sanctions Can’t Keep China From Buying Russian Oil
- Canada Says Its Oil Could Replace U.S. Imports Of Russian Crude
- Oil Rises As UAE Backtracks On OPEC Output Boost Statement