Opec left its oil demand forecast for 2021 unchanged from last month’s assessment as it expected global economic recovery to gain pace amid widespread vaccine campaigns.
Oil demand is expected to grow at 6 million barrels per day with total consumption expected to hit 96.6 million bpd, the group said in its monthly oil market report on Thursday.
“World oil demand growth in 2021 remains unchanged from last month’s report. This is despite the upward revision to GDP growth, as the rising economic recovery is projected to take place mainly in non-oil-intensive sector,” Opec said.
In the Organisation for Economic Co-operation and Development (OECD) region, oil demand is expected to increase by 2.6 million bpd to reach 44.6 million bpd, while in non-OECD, oil demand is expected to increase by 3.4 million barrels per day to reach 51.9 million bpd.
Opec expects the global economy to expand by 5.6 per cent in 2021 and 4.2 per cent in 2022, despite uncertainties related to the pandemic and the pace of the vaccine introduction worldwide.
Last month, the International Monetary Fund maintained its global economic forecast at 6 per cent but downgraded its growth outlook for emerging markets and developing economies owing to the uneven access to vaccines and the emergence of Covid-19 variants that are hindering the shape of the recovery.
Opec also kept world oil demand for 2022 unchanged. It projects demand to increase by 3.3 million barrels per day as it assumed economic activity to mostly take place in non-oil intensive sectors.
Total world oil demand is projected to exceed 100 million bpd in the second half of 2022 and reach 99.9 million bpd on average for 2022.
“Economic activities are still projected to gain traction, supported by massive stimulus packages,” the group said. “Additionally, the Covid-19 pandemic is anticipated to be controlled by vaccination programmes and improved treatment, resulting in a further recovery in economic activity and a steady rise in oil demand in both the OECD and non-OECD.”
Oil supply growth forecasts from non-Opec countries in 2021 and 2022 have also been revised up by 0.27 million bpd and 0.84 million bpd respectively owing to the “incorporation of the latest production adjustment decision of the non-Opec countries participating in the Declaration of Cooperation” deal after the Opec and non-Opec ministerial meeting last month.
Opec+, led by Saudi Arabia and Russia, extended its agreement until the end of December 2022. The group reached a consensus over the phasing out of 5.8 million bpd of withheld supply after weeks of deadlock and will review the agreement at the end of the year.
Brent, the global benchmark for two thirds of the world’s oil, dropped 0.36 per cent to $71.18 per barrel at 4.09pm UAE time. US crude gauge West Texas Intermediate also slid 0.48 per cent to $68.92 per barrel.