OPEC Cuts 2022 Global Oil Demand Forecast by 300,000 B/D

By Geoffrey Smith 

Investing.com — The Group of the Petroleum Exporting International locations lower its forecast for world oil demand this 12 months, because of the impact of COVID-19 lockdowns in China and the struggle in jap Europe. 

In its month-to-month report for Might, OPEC mentioned it now expects international demand to develop by a median of solely 3.4 million barrels a day this 12 months, down from a previous estimate of three.7 million b/d. 

That masks a dramatic slowdown in progress between the primary and the second quarters of this 12 months. Whereas first-quarter demand was up 5.2 million b/d, demand progress is anticipated to fall to 2.8 million b/d within the present quarter. 

The bloc did not single out China, however cited “COVID-19 pandemic restrictions” which have affected the nation greater than wherever else on the earth within the final couple of months. Inside journey demand has slumped, together with enterprise exercise, as the important thing port of Shanghai, the northeast area of Jilin, and latterly the cities of Beijing and Hangzhou have all been hit by prolonged lockdowns of various severity. The Chinese language authorities has signaled it will not abandon its “Zero-COVID” coverage. 

OPEC additionally mentioned it anticipated demand to be hit by “ongoing geopolitical developments in Japanese Europe,” a euphemism for the invasion of Ukraine by its associate, Russia. That has pushed power costs to document highs in each Europe and the U.S., resulting in rising indicators of demand destruction. 

OPEC additionally revised down its estimate for Russian oil manufacturing this 12 months by 360,000 barrels a day. Manufacturing in Russia fell sharply in April because the nation struggled to search out consumers to switch European, U.S., and Japanese prospects. 

Nonetheless, it nonetheless sees solely a modest danger of U.S. producers stepping as much as fill that hole on the earth oil provide. It left unchanged its forecast for U.S. output progress at a median of 1.29 million barrels a day. 

futures had been down 1.5% at $104.16 a barrel after the information, paring earlier losses. was down 1.5% at $105.85.