OPEC said in a monthly report that it expects oil demand to average 99.70 million barrels per day (bpd) in the fourth quarter of 2021, 110,000 bpd less than last month’s forecast.
“The increased risk of Covid-19 cases driven mainly by the Delta variant is clouding the oil demand outlook for the last quarter of the year,” OPEC said in the report.
“As a result, oil demand in the second half of 2021 has been adjusted slightly downward, partially delaying the recovery in oil demand until the first half of 2022.”
Governments, businesses and traders are closely monitoring the rate at which oil demand recovers from last year’s collapse. A faster return, as OPEC predicts, could boost prices and challenge the view that the impact of the pandemic may curb consumption longer or forever.
Oil was trading above $ 73 a barrel after the report was released. Prices have risen more than 40% this year, fueled by hopes for an economic recovery and OPEC + supply cuts, although concerns about the Delta variant have weighed.
Despite the fourth-quarter downward revision, OPEC said global oil demand in all of 2021 would rise by 5.96 million bpd or 6.6%, virtually unchanged from last month.
The growth forecast for 2022 was adjusted to 4.15 million bpd, compared to 3.28 million bpd in last month’s report and an estimate of 4.2 million bpd given by OPEC sources during the last group meeting on September 1.
“Now it is assumed that the pace of recovery of oil demand will be stronger and will take place mainly in 2022,” said OPEC.
“As vaccination rates increase, it is expected that the Covid-19 pandemic will be better managed and that economic activities and mobility will firmly return to pre-Covid-19 levels.”
Highest demand view
With the latest changes, OPEC still has the highest demand growth figures among the three major oil forecasting agencies: itself, the US government, and the International Energy Agency, an advisor to the consuming nations issuing its latest monthly report on Tuesday.
OPEC and its allies, known as OPEC +, are gradually reducing the record oil production cuts implemented last year due to the pandemic.
In July, they agreed to gradually increase production by 400,000 bpd a month starting in August and confirmed the plan at their last meeting on September 1.
The report showed that OPEC production rose in August by 150,000 bpd to 26.75 million bpd, led by Iraq and Saudi Arabia. An involuntary cut in Nigeria reduced the magnitude of the increase in supply.