-2.1 C
New York City
Thursday, December 8, 2022
Home BUSINESS ENERGY OPEC Cuts Oil Demand Growth Forecast Again As Economic Challenges Mount

OPEC Cuts Oil Demand Growth Forecast Again As Economic Challenges Mount

OPEC on Monday cut its forecast for 2022 global oil demand growth for a fifth time since April and further trimmed next year’s figure, citing mounting economic challenges including high inflation and rising interest rates.

Oil demand in 2022 will increase by 2.55 million barrels per day (bpd), or 2.6%, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report, down 100,000 bpd from the previous forecast.

“The world economy has entered a period of significant uncertainty and rising challenges in the fourth quarter of 2022,” OPEC said in the report.

“Downside risks include high inflation, monetary tightening by major central banks, high sovereign debt levels in many regions, tightening labour markets and persisting supply chain constraints.”

This report is the last before OPEC and its allies, together known as OPEC+, meet on Dec. 4. The group, which recently cut production targets, will remain cautious, the energy minister for Saudi Arabia, the OPEC+ de-facto leader, was quoted as saying last week.

Next year, OPEC expects oil demand to rise by 2.24 million bpd, also 100,000 bpd lower than previously forecast.

Despite commenting on the rising challenges, OPEC left its 2022 and 2023 global economic growth forecasts steady and said while risks were skewed to the downside, there was also upside potential.

“This may come from a variety of sources. Predominantly, inflation could be positively impacted by any resolution of the geopolitical situation in Eastern Europe, allowing for less hawkish monetary policies,” OPEC said.

Oil maintained a decline after the report was released, trading around $95 a barrel.

MOVE TO SURPLUS

For October, with oil prices weakening on recession fears, the group made a 100,000 bpd cut to the OPEC+ production target, with an even bigger reduction starting in November.

Saudi Arabia said the latest cut was necessary to respond to rising interest rates in the West and a weaker global economy. U.S. President Joe Biden criticised the decision, calling it shortsighted.

OPEC said in Monday’s report that in the second and third quarters of this year, global oil supply outpaced total oil demand by 200,000 bpd and 1.1 million bpd respectively, having been in a deficit of 300,000 bpd in the first quarter.

OPEC said its output in October fell by 210,000 bpd to 29.49 million bpd, more than the pledged OPEC+ reduction, led by a 149,000 bpd cut by Saudi Arabia. The figures are compiled by OPEC using secondary sources.

Saudi Arabia itself, however, reported to OPEC a smaller drop of 84,000 bpd, bringing its October output to a shade below 11 million bpd. (Reuters)

©Copyright MOTORING WORLD INTERNATIONAL. All rights reserved. Materials, photographs, illustrations and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior written permission from Motoring World International

Contactinfo@motoringworldng.com

Most Popular

Volkswagen CEO to Present Software ‘Reality Check’ To Board

Volkswagen's (VOWG_p.DE) CEO will outline a new software and vehicle platform strategy to the carmaker's supervisory board on Dec. 15 as he tries to...

Toyota Set for 2023 Dakar Rally With Three-Car Team

TOYOTA GAZOO Racing is set to take on the 2023 Dakar Rally with a three-car team early in January. The defending champions, Nasser Al-Attiyah and...

New Fully Electric Volvo C40 Recharge Heads for South Africa

The new fully electric C40 Recharge is scheduled to join Southern Africa’s range of electrified vehicles in the first half of 2023. Offering many of...

Hyundai IONIQ 5 Wins Car of the Year Award

The 2022 Hyundai IONIQ 5 has earned Esquire’s Car of the Year this month, adding another coveted award to its growing trophy case. Every year, Esquire editors drive and...
%d bloggers like this: