OPEC Trims 2022, 2023 Forecasts For Global Oil Demand Growth: 'Risks Skewed To Downside'

The Organization of the Petroleum Exporting Countries on Wednesday reduced its 2022 forecast for growth in world oil demand for a fourth time since April, stating oil demand will rise by 2.64 million barrels per day (bpd) or 2.7% in the year. This is down 460,000 bpd from its previous forecast, reported Reuters.

“However, risks are skewed to the downside, with slowing growth in the global economy, if continued, likely leading to lower oil demand in the months to come,” OPEC said in its report.

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OPEC also sees oil demand rising by 2.34 million bpd in 2023, 360,000 bpd less than previously forecast, to 102.02 million bpd. The group still anticipates demand in 2023 to exceed the pre-pandemic rate of 2019, the Reuters report said.

Outlook: Despite the usual seasonal hike in oil demand for heating, the challenges from rising uncertainty, slowing economic growth and a possible resurgence of COVID-19 restrictions in China and elsewhere are expected to impact oil demand in 2022 and 2023, the group said in its report.

The United States Brent Oil Fund BNO closed over 1% down on Wednesday while the Vanguard Energy Index Fund ETF VDE closed 0.8% higher.

Last week, Saudi Energy Minister Prince Abdulaziz bin Salman cited a “variety of convoluted uncertainties” for the OPEC production cut, according to a Bloomberg report.

The International Monetary Fund also warned on Tuesday that the worst of the current turmoil “is yet to come,” the report said.

Biden’s Response: Last week, OPEC+ announced it would reduce oil output by 2 million barrels per day disappointing President Joe Biden’s administration which had tried to persuade the group’s core member Saudi Arabia to increase output.

As anger boiled over OPEC+'s decision, Biden’s staff announced he would re-evaluate the entire relationship with Saudi Arabia. 

Following the decision, the ‘No Oil Producing and Exporting Cartels’ (NOPEC) bill has gained momentum in the U.S. If it is passed by both chambers of Congress and signed by the President, NOPEC would change U.S. antitrust law to revoke the sovereign immunity that has so far protected OPEC+ members and their national oil companies from lawsuits.

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