OPEC’s latest oil demand forecast fits into a plan for it and its allies to increase oil supply and fresh prices, which are close to their highest levels in two years and mig.
OPEC expects a gradual recovery in demand for crude oil this year and next, as the group closes an agreement to reactivate production still closed since the pandemic.
The need for supplies from the Organization of Petroleum Exporting Countries will continue to increase, remaining well above the group’s current production and exceeding pre-virus levels during the second half of 2022. But it will go through a pause in the first quarter that could see the global market return to surplus, the group said.
“Looking ahead to 2022, risks and uncertainties are emerging and require careful monitoring to ensure the recovery from the Covid-19 pandemic,” OPEC said in its monthly report, which contained the first detailed estimates for the next year.
The mixed outlook is in line with the plans of OPEC and its allies (yet to be ratified) to gently restore the huge amounts of production they still have offline in monthly tranches of 400,000 barrels a day. Before this roadmap can be approved, the group must first resolve a dispute between the United Arab Emirates and Saudi Arabia.
The two countries have made progress in resolving a dispute over what the UAE says is an unfairly low production limit. If they can overcome the bitter stalemate, the coalition can proceed to restart idle barrels.
International oil prices are trading near their highest level in 2 1/2 years, at about $ 74 a barrel in London, while fuel consumption is roaring again in the US and China with the lifting of blockades. Still, crude oil remains volatile amid threats from coronavirus variants and fears that OPEC’s internal shock could erode its cohesion.
The analysis released on Thursday by the research department of the Vienna-based OPEC secretariat highlights why the cartel wants to move forward carefully and why Abu Dhabi’s insistence on increasing production was initially rejected.
OPEC predicts that global oil demand will increase by 3.3 million barrels per day in 2022, approximately 3.4%, and will exceed 100 million barrels per day in the third quarter for the first time since the coronavirus emerged. But before reaching this level, consumption will suffer a relapse in the first quarter, which will return to 97 million a day.
Much of the rise in demand will be met by the reactivation of supplies from OPEC rivals. Non-OPEC production will increase by 2.1 million barrels a day next year, or 3.3%, with about a third of growth coming from the cartel’s long-term competitor, the United States.
The organization’s demand for crude oil will exceed 30 million barrels per day during the second half of 2022, significantly above the 26 million it pumped in June. This should allow OPEC and its partners, which have already restored about 40% of the production cut during the pandemic, to produce at almost normal levels.
“The ongoing powerful stimulus measures and high savings rates in advanced economies are expected to lead to the release of accumulated demand in the second half of 2021, which will last until 2022,” he said. the organization.
However, in the first quarter of 2022, OPEC’s call for crude oil will fall to 26.4 million barrels a day, below the level that is likely to be pumped this month once the planned increases are made. The alliance’s interim plan to drip-feed the return of more barrels in the coming months will make that surplus even bigger.
This soft patch may help explain why Riyadh is pushing to ensure that the OPEC + agreement to restrict production continues beyond its April due date.