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OPEC has revised down its oil demand growth estimates for this year and next—a third downward revision in as many months—citing potential headwinds to global economic growth ranging from trade disputes to weakening finances in emerging markets and geopolitical challenges.
In its closely watched Monthly Oil Market Report published on Thursday, OPEC revised down its global oil demand growth to 1.54 million bpd this year, down by 80,000 bpd from the estimate in the September report.
In last month’s report, the downward revisions from August were much smaller—by 20,000 bpd for global oil demand growth in both 2018 and 2019.
In its latest estimate, OPEC now sees global oil demand growth next year at 1.36 million bpd, down by around 50,000 bpd from last month’s assessment, to reflect expectations for lower economic growth for Turkey, Brazil, and Argentina. As a result, total world oil demand in 2019 is now expected to reach 100.15 million bpd. Oil demand growth will be mainly driven by India, followed by China and OECD America, OPEC said.
Among the reasons for reduced oil demand growth forecasts, the cartel cited potential headwinds for the world’s economic growth, with growth trends starting to diverge between and within regions.
“Global economic growth remains solid, but is facing potential headwinds. Following a period of relatively synchronized growth, the economic growth trends between, and within, major regions are increasingly diverging. While growth in the major OECD economies remains well supported, decelerating trends have become visible in some emerging markets and developing countries (EMDCs),” OPEC said.
Monetary tightening by central banks, weakening financial situations in some emerging markets and developing economies, rising trade tensions, and ongoing geopolitical challenges in some parts of the world are challenges to the global growth trend, OPEC said.
“The forecast considers that there will be no further significant rises in trade tariffs in major economies and that the impact of current disputes will remain limited. Moreover, it considers that EMDCs’ market wobbles will remain contained,” the cartel noted.
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.