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China’s reopening is set to add momentum to global economic growth, OPEC said on Tuesday, revising up its forecast for Chinese oil demand growth this year.
“In the emerging economies, China’s reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth,” OPEC said in its closely-watched Monthly Oil Market Report (MOMR) today.
China’s oil demand is expected to average 15.56 million barrels per day (bpd) in 2023, up by 710,000 bpd compared to last year, according to OPEC’s latest estimate. That’s higher than the 590,000-bpd growth expected in last month’s report.
Despite the upward revision of Chinese demand, OPEC left its world oil demand growth forecast unchanged from the February estimate, expecting growth of 2.32 million bpd this year. That’s because upward revisions for Chinese demand are being offset by downward revisions in North American and European demand for the first half of 2023 “due to an expected slowdown in economic activity in OECD Americas and OECD Europe.”
As per usual over the past year, OPEC cautioned that its estimate of global growth in economy and oil consumption has a high level of uncertainty due to a number of upside and downside risks.
Upsides include the Fed managing inflation in the latter half of this year with sufficiently healthy underlying demand, a possible better-than-expected performance in the Eurozone, and an acceleration in China.
“A stronger-than-anticipated rebound in China, with consumption accelerating significantly, following years of stringent lockdown measures, is another factor to be considered,” OPEC said.
Last month, the International Energy Agency (IEA) said that China’s resurgent oil demand – with growth seen at 900,000 bpd this year – and the rest of the Asia-Pacific region will dominate global growth.
“China accounts for nearly half the 2 mb/d projected increase this year, with neighbouring countries also set to benefit after Beijing ditched its zero-Covid policies,” the IEA said in its February report. The March report is due out on Wednesday.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com