OPEC cuts 2022 global oil demand forecast by 300,000 bpd

By Geoffrey Smith

Investing.com — The Organization of the Petroleum Exporting Countries has lowered its forecast for global oil demand this year, due to the effect of COVID-19 lockdowns in China and war in Eastern Europe. ballast.

In its May monthly report, OPEC said it now expects global demand to rise by an average of just 3.4 million barrels a day this year, down from an earlier estimate of 3.7 million. b/d.

This masks a dramatic slowdown in growth between the first and second quarters of this year. While demand in the first quarter was up 5.2 million bpd, demand growth is expected to fall to 2.8 million bpd in the current quarter.

The bloc did not single out China, but cited the “COVID-19 pandemic restrictions” which have affected the country more than anywhere else in the world over the past two months. Domestic travel demand has plummeted, along with business activity, as the key port of Shanghai, the northeast region of Jilin and, more recently, the cities of Beijing and Hangzhou have all been hit by lengthy lockdowns. variable. The Chinese government has signaled that it will not abandon its “Zero-COVID” policy.

OPEC also said it expected demand to be hit by “ongoing geopolitical developments in Eastern Europe”, a euphemism for partner Russia’s invasion of Ukraine. . This has driven energy prices to record highs in Europe and the United States, leading to growing signs of demand destruction.

OPEC has also revised down its estimate of Russian oil production this year by 360,000 barrels per day. Production in Russia fell sharply in April as the country struggled to find buyers to replace European, American and Japanese customers.

However, he still sees only a modest risk that U.S. producers will step in to fill that void in global oil supply. He left unchanged his forecast for US production growth at an average of 1.29 million barrels per day.

U.S. crude futures fell 1.5% to $104.16 a barrel after the news, paring earlier losses. Brent crude fell 1.5% to $105.85.

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Felix J. Dixon