Global oil demand to rise to 2.3 million barrels per day, says OPEC

NAIROBI, Kenya - Global oil demand this year will rise by 2.35 million barrels per day or 2.4 percent. This demand was announced by the Organization of the Petroleum Exporting Countries, [OPEC] in its monthly report.

“There are rising uncertainties regarding economic growth in the second half of 2023 amid ongoing high inflation, already elevated key interest rates, and tight labor markets,” OPEC said in its report.

The report findings also indicate that “Moreover, it is still unclear as to how and when the geopolitical conflict in Eastern Europe might be resolved,” it added, referring to Ukraine.

OPEC+, which comprises OPEC, Russia, and other allies, has been taking more steps to support the oil market in 2023. Earlier this month the group announced its second package of output cuts since April and Saudi Arabia pledged a voluntary cut for July.

Crude prices, however, have remained under pressure from concerns over slowing economic growth and demand.

The Brent crude benchmark added to an earlier gain after the report was released, rising 2.5 percent gain to trade above $73 a barrel.

Chinese oil demand is now expected to rise by 840,000 bpd, OPEC said, up from the 800,000 bpd forecast last month, adding to a recovery after strict COVID-19 containment measures were scrapped.

OPEC left its 2023 global economic growth forecast at 2.6 percent and said momentum was slowing. A graphic in the report showed that growth could slow to 0.1 percent quarter on quarter in the final three months of the year.

Potential upside factors, other than a drop in inflation, include an even stronger than previously expected economic rebound in China and the United States being able to maintain its first-half momentum, OPEC said.

The report also showed OPEC’s oil production fell in May, reflecting the impact of earlier output cuts pledged by OPEC+ as well as some unplanned outages.

The OPEC report said its May output fell by 464,000 bpd to 28.06 million bpd as voluntary cuts, promised by Saudi Arabia and other members, took effect.

Last year, with prices weakening, OPEC+ agreed to a 2 million bpd cut in its output target from November — its largest reduction since the COVID-19 pandemic in 2020. On April 2 several OPEC+ members pledged voluntary cuts that added to the deal agreed last year.

GAROWE ONLINE