London: OPEC on Wednesday cut its 2022 forecast for growth in world oil demand for a fourth time since April and also trimmed next year's figure, citing slowing economies and high inflation.
Oil demand will increase by 2.64 million barrels per day (bpd) or 2.7% in 2022, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report, down 460,000 bpd from the previous forecast.
"The world economy has entered into a time of heightened uncertainty and rising challenges, amid ongoing high inflation levels, monetary tightening by major central banks, high sovereign debt levels in many regions as well as ongoing supply issues," OPEC said in the report.
The lower demand outlook gives additional context for last week's move by OPEC and its allies, known as OPEC+, to make their largest cut in output since 2020 to support the market.
On Wednesday, the US Energy Department also lowered its expectations for global output and consumption in 2023.
Even after the downgrade, OPEC still expects demand growth to be stronger this year and next than the International Energy Agency, which issues its latest forecasts on Thursday.
Next year, OPEC sees oil demand rising by 2.34 million bpd, 360,000 bpd less than previously forecast, to 102.02 million bpd. OPEC still expects demand in 2023 to exceed the pre-pandemic rate of 2019.
The US Energy Department, by contrast, sees demand growing by 1.5% in 2023 to 101.03 million bpd, down from 101.50 million bpd forecast last month. It also only expects a 0.8% increase in production to 100.73 million bpd next year.
OPEC cut its 2022 global economic growth forecast to 2.7% from 3.1%, trimmed next year's figure to 2.5% and said there was potential for further weakness.
"Major downside risks still exist," OPEC said, adding there was a limited upside potential from such factors as fiscal measures in the European Union and China, and any resolution to the Ukraine war.
Oil prices, which have been weakening in response to fears about the economy, closed lower, trading below $93 a barrel.