London: OPEC on Thursday cut its 2022 forecast for growth in world oil demand for a third time since April, citing the economic impact of Russia’s attack on Ukraine, high inflation and efforts to contain the coronavirus pandemic.
The view from the Organisation of the Petroleum Exporting Countries contrasts with that of the International Energy Agency, which earlier on Thursday raised its demand outlook.
OPEC in a monthly report said it expects 2022 oil demand to rise by 3.1 million barrels per day (bpd), or 3.2 per cent, down 260,000 bpd from the previous forecast.
OPEC left its 2023 growth projection unchanged at 2.7 million bpd.
Oil use has rebounded from the worst of the pandemic and is set to exceed 2019 levels this year even after prices hit record highs. However, high crude prices and Chinese coronavirus outbreaks have eaten into 2022 growth projections.
“Global oil market fundamentals continued their strong recovery to pre-COVID-19 levels for most of the first half of 2022, albeit signs of slowing growth in the world economy and oil demand have emerged,” OPEC said in the report.
OPEC cut its 2022 global economic growth forecast to 3.1 per cent from 3.5 per cent and trimmed next year to 3.1 per cent, saying that the prospect of further weakness remained.
“This is, however, still solid growth, when compared with pre-pandemic growth levels, which were only slightly higher on average and not burdened by current potentially impactful issues,” OPEC said.
“Therefore, it is obvious that significant downside risk prevails.” Oil held on to an earlier gain after the report was released, finding support from the IEA’s view on demand and trading above $98 a barrel.
OPEC and allies including Russia, known collectively as OPEC+, are ramping up oil output after record cuts put in place as the pandemic took hold in 2020.
In recent months OPEC+ has failed to fully achieve its planned production increases owing to underinvestment in oilfields by some OPEC members and by losses in Russian output.
The report showed OPEC output in July rose by 162,000 bpd to 28.84 million bpd.