Opec keeps 2022 oil demand forecast unchanged despite inflation and Ukraine war

The producers' group estimates global oil consumption in 2022 to average 100 million bpd

Opec says the global growth level has been well supported by consumption, especially in advanced economies. Reuters

Opec kept its global oil demand forecast unchanged for this year despite headwinds from rising inflation, increasing interest rates and the continuing war in Ukraine.

World oil demand growth remained pegged at “a healthy” 3.1 million barrels per day rise in 2022, including the recent additional oil demand growth due to fuel-switching in power generation, the producers’ group said in its monthly market report on Tuesday.

It estimates global oil consumption in 2022 to average 100 million bpd.

Saudi Arabia, the world's top oil exporter, produced 11.05 million barrels per day in August, up from 10.8 million barrels per day in July.

“The global growth level has been well supported by consumption, which has shown a solid trend especially in advanced economies,” Opec said.

“However, some downside risks remain, stemming from ongoing geopolitical tensions, the pandemic, supply chain issues, rising inflation, high sovereign debt levels in many regions and expected monetary tightening by US, EU and UK central banks.”

The group estimates oil demand in member countries of the Organisation for Economic Co-operation and Development (OECD) to grow by 1.6 million bpd in 2022, while the non-OECD growth is expected at 1.5 million bpd.

“The second quarter of 2022 is revised higher amid better-than-anticipated oil demand in the main OECD consuming countries, while the third and fourth quarter of 2022 have seen offsetting revisions,” Opec said.

For 2023, the forecast for world oil demand growth remains unchanged at 2.7 million bpd, with total oil demand averaging 102.73 million bpd, Opec data indicated.

Oil demand next year is expected to be supported by a “still-solid economic performance in major consuming countries, as well as potential improvements in Covid-19 restrictions and reduced geopolitical uncertainties", the group said.

Oil prices have remained volatile this year. Brent rose to a notch under $140 a barrel in March after Russia’s military offensive in Ukraine. Trading has remained volatile amid demand concerns, rising inflation and subsequent increase in interest rates.

Lockdowns across China that are affecting about 65 million citizens in the world's largest energy importer also remain a concern for energy markets.

Meanwhile, the weakening global economic outlook could also dent demand.

In July, the International Monetary Fund lowered its growth forecast for the global economy to 3.2 per cent this year, from its previous projection of 3.6 per cent in April.

Opec on Tuesday kept its global economic growth forecast unchanged at 3.1 per cent for both this year and next.

It has also kept the US economic projection unchanged for 2022 at 1.8 per cent, but revised down eurozone growth to 3.1 per cent. China’s 2022 growth forecast was also lowered to 4.2 per cent, while India’s remained unchanged at 7.1 per cent.