OPEC reduces oil demand growth forecast again citing escalating economic difficulties


OPEC: OPEC on Monday cut its global oil demand growth forecast for 2022 for the seventh time since April and also cut its estimate for next year, citing worsening economic difficulties such as high inflation and rising interest rates.

According to the monthly report of the Organization of the Petroleum Exporting Countries (OPEC), oil consumption will increase by 2.55 million barrels per day (bpd), or 2.6%, in 2022, which is 100,000 barrels per day less than the previous forecast.

“The global economy entered a period of significant uncertainty and increasing challenges in the fourth quarter of 2022,” OPEC’s report said.

“Downside risks include high inflation, monetary tightening by major central banks, high levels of public debt in many regions, tight labor markets and persistent supply chain constraints.”

OPEC and its partners, collectively known as OPEC+, will meet on December 4 to decide on policy, this is the final report. The company, which recently lowered its output targets, will remain cautious, according to a report from Saudi Arabia’s oil minister last week.

OPEC expects oil demand to increase by 2.24 million barrels per day next year, which is also 100,000 barrels per day less than expected. OPEC commented on the mounting obstacles but left its forecasts for global economic growth in 2022 and 2023 unchanged, saying that while risks were skewed to the downside, there was scope for an upside.

“This can come from a variety of sources. Inflation could be predominantly positively affected by any settlement of the geopolitical situation in Eastern Europe, which would allow for a less dovish monetary policy,” OPEC said.

After the report was released, oil continued to fall, trading at around $95 a barrel. The group cut OPEC+’s October output target by 100,000 bpd amid falling oil prices on worries about an impending recession, with further cuts set to begin in November.

The report said OPEC production fell by 210,000 barrels per day in October to 29.49 million barrels per day, exceeding the reduction promised by OPEC+.

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