OPEC holds 2023 oil demand view steady, warns on economic outlook

London: OPEC left its 2023 global oil demand growth forecast steady for a fourth month on Tuesday, although the producer group warned that the world economy faced rising uncertainty and slower growth in the second half of the year.

World oil demand in 2023 will rise by 2.35 million barrels per day (bpd), or 2.4 per cent, the Organisation of the Petroleum Exporting Countries (OPEC) said in its monthly report.

This was virtually unchanged from 2.33 million bpd forecast last month.

“There are rising uncertainties regarding economic growth in the second half of 2023 amid ongoing high inflation, already elevated key interest rates and tight labour markets,” OPEC said in the report.

“Moreover, it is still unclear as to how and when the geopolitical conflict in Eastern Europe might be resolved,” it said, referring to Ukraine.

OPEC+, which comprises OPEC, Russia and other allies, has been taking more steps to support the oil market in 2023.

On June 4 it announced its second package of output cuts since April. Crude prices, however, have remained under pressure from concern over slowing economic growth and demand.

The report showed OPEC’s oil production fell in May, reflecting the impact of earlier output cuts pledged by OPEC+ as well as some unplanned outages.

OPEC said in the report its May output fell by 464,000 bpd to 28.06 million bpd as voluntary cuts, promised by Saudi Arabia and other members, took effect.

Last year, with prices weakening, OPEC+ agreed to a 2 million bpd cut in its output target from November in its largest reduction since the COVID-19 pandemic in 2020.

On April 2, several OPEC+ members pledged additional voluntary cuts.