OPEC set to revise down oil demand outlook on COVID-19 surge

OPEC and allied oil-producing countries (OPEC+) agreed to stick to a scheduled 432,000 barrels per day (bpd) in its June crude production ceiling, with plans to restore regular increase paused by the 2020 pandemic.

Oil cartel, OPEC may revise down its 2022 oil demand growth forecast on Monday, as the spread of the Delta coronavirus variant puts the speed of a recovery in fuel use in doubt according to a Reuters report.

On September 1, separate sources said the Organisation of the Petroleum Exporting Countries and allies, known as OPEC+, increased its 2022 oil demand forecast to 4.2 million barrels per day (bpd) from 3.28 million bpd previously.

The new figure was seen as optimistic by some in the group, likely prompting revisions. OPEC is scheduled to make its latest supply and demand forecasts public in a report on Monday.

Governments, companies and traders are closely monitoring the speed that oil demand recovers after crashing in 2020. A slower return could weigh on prices and bolster the view that the impact of pandemic may affect consumption patterns for longer or permanently.

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OPEC currently has the highest demand growth figures among the three main oil forecasting agencies – itself, the EIA and the International Energy Agency, an adviser to consuming nations which issues its latest monthly report on Tuesday.

In 2021, OPEC expects oil demand to rise by 5.95 million bpd, higher than the IEA figure of 5.3 million bpd and the EIA forecast of 5 million bpd.

For OPEC’s 2021 oil demand growth forecast to be met, world oil demand needs to average 99.82 million bpd in the fourth quarter – almost 1 million bpd higher than the International Energy Agency’s fourth-quarter projection.

Africa’s biggest oil producer Nigeria is contributing to OPEC’s bearish outlook as the country has been unable to meet its quota. Reports by SP Platts indicated that Nigeria’s production averaged 1.2 million barrels per day in August.

Isaac Anyaogu

Isaac Anyaogu is an Assistant editor and head of the energy and environment desk. He is an award-winning journalist who has written hundreds of reports on Nigeria’s oil and gas industry, energy and environmental policies, regulation and climate change impacts in Africa. He was part of a journalist team that investigated lead acid pollution by an Indian recycler in Nigeria and won the international prize - Fetisov Journalism award in 2020. Mr Anyaogu joined BusinessDay in January 2016 as a multimedia content producer on the energy desk and rose to head the desk in October 2020 after several ground breaking stories and multiple award wining stories. His reporting covers start-ups, companies and markets, financing and regulatory policies in the power sector, oil and gas, renewable energy and environmental sectors He has covered the Niger Delta crises, and corruption in NIgeria’s petroleum product imports. He left the Audit and Consulting firm, OR&C Consultants in 2015 after three years to write for BusinessDay and his background working with financial statements, audit reports and tax consulting assignments significantly benefited his reporting. Mr Anyaogu studied mass communications and Media Studies and has attended several training programmes in Ghana, South Africa and the United States