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For a second consecutive month, OPEC revised down its global oil demand growth estimate for this year and next, pointing at a combination of factors that could slow down global economic growth.
In its closely watched Monthly Oil Market Report published on Wednesday, OPEC revised down world oil demand growth for 2018 by around 20,000 bpd, primarily as a result of the slower-than-expected performance by Latin America and the Middle East in the second quarter. Global oil demand growth is now pegged at 1.62 million bpd, with total global consumption at 98.82 million bpd this year.
For 2019, OPEC also trimmed its oil demand growth estimate by 20,000 bpd from the previous month’s report, mostly due to economic revisions to Latin America and the Middle East. World oil demand growth in 2019 is now anticipated at 1.41 million bpd and total global consumption at around 100.23 million bpd, OPEC said.
In its report last month, OPEC had also revised down its oil demand growth forecast by 20,000 bpd for each of 2018 and 2019. In August, OPEC warned about rising trade tensions that could “provide a significant downside risk to the current relatively positive outlook.”
In the September report, OPEC’s warnings have grown and the cartel said that “Underlying fragility has recently emerged in several areas and therefore the risk to 2018 and 2019 global economic forecasts is now more skewed to the downside.”
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“A combination of monetary tightening from G4 central banks, the weakening financial situations in some emerging and developing economies, rising trade tensions and ongoing geopolitical concerns in some parts of the world constitute challenges to the current global economic growth trend,” OPEC said.
Referring to the August production, the cartel’s secondary sources pegged it at an average 32.56 million bpd, up by 278,000 bpd over July, due to higher production in Libya, Iraq, Nigeria, and Saudi Arabia, while production declined in Iran, Venezuela, and Algeria.
Saudi Arabia’s oil production inched up 38,000 bpd to 10.401 million bpd, according to secondary sources. Production in Iran, on the other hand, plunged by 150,000 bpd to 3.584 million bpd, as the U.S. sanctions start to impact not only Iranian exports, but also its production. Iran saw the largest drop in output, with Venezuela a distant second in declines with a 36,000-bpd fall compared to July, to just 1.235 million bpd in August.
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.