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

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.

Read also: OPEC+ likely to keep oil output policy unchanged, sources say

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.

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