OPEC expects oil demand to rise by 5.8 million barrels per day (bpd) this year, down by around 100,000 bpd from last month's projection due to lockdowns in major developed economies in the first half of this year, the cartel said on Thursday.
"Extended lockdowns and the re-introduction of partial lockdowns in a number of countries has resulted in downward revisions to 1H21 projections," OPEC said in its February Oil Market Report (MOMR).
In the January report, OPEC expected demand to rise by 5.9 million bpd in 2021 from an estimated average demand of 90 million bpd in 2020, leaving its 2021 demand growth forecast unchanged from December but warning that the pandemic was still skewing risks to the downside.
The organization now expects healthy demand in the second half of 2021, driven by growing economies and massive stimulus programs. OPEC's view for the latter half of this year is largely in line with most of the other forecasters and many analysts, who expect pent-up economic and fuel demand from the summer onwards.
"While the global economy is showing signs of a healthy recovery in 2021, oil demand is currently lagging, but is forecast to pick up in the 2H21," said OPEC.
The cartel's base assumption for global economic growth this year is that "by 2H21, COVID-19 will largely be overcome."
Economic growth could rise more than currently expected if the fiscal and monetary stimulus is large, especially in the U.S. Growth will also depend on how successful the efforts to contain COVID-19 will be, OPEC said, noting that the effectiveness of vaccines against the virus variants would also be a factor driving economic and oil demand growth.
According to secondary sources, OPEC's crude oil production averaged 25.50 million bpd in January 2021, up by 180,000 bpd from December, with output rising in top producer Saudi Arabia, as well as in Venezuela and Iran, which are exempt from the OPEC+ cuts.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More