OPEC reduces oil demand forecast for last quarter of 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Monday reduced its world oil demand forecast for the last quarter of 2021 as the Delta variant spreads rapidly.

In a monthly report, OPEC said that in the fourth quarter of 2021, it expects oil demand to average 99.70 million barrels per day—decrease of 110,000 bpd from last month’s forecast.

 "The increased risk of COVID-19 cases primarily fueled by the Delta variant is clouding oil demand prospects going into the final quarter of the year," OPEC said in the report.

"As a result, second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022."

The OPEC, though, said the consumption in 2022 will exceed pre-pandemic levels and revised the growth forecast for 2022 to 4.15 million bpd, compared to 3.28 million bpd in last month’s report.

"The pace of recovery in oil demand is now assumed to be stronger and mostly taking place in 2022," OPEC said.

"As vaccination rates rise, the COVID-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-COVID-19 levels."

After the release of the report, oil was trading at $73 per barrel. OPEC said that the world oil demand would rise by 5.96 million bpd or 6.6% in 2021.

OPEC+ had imposed oil output cuts during to the pandemic due to low demand but with economic recovery, the group is lifting the cuts.

In July, the group announced to boost output by 400,000 bpd a month from August. The report released on Monday showed output increased in August by 150,000 bpd to 26.75 million bpd.

(With inputs from Reuters)

Picture Credits: Reuters