The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for growth in world oil demand in 2022 by about 500,000 barrels per day (bpd), citing the impact of Russia’s invasion of Ukraine, rising inflation as crude prices soar, and the resurgence of the Omicron coronavirus variant in China.
In a monthly report, OPEC said world demand would rise by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast of 4.15 million bpd made last month.
This is largely due to OPEC’s lower economic growth adjustment as the organization reduced its global economic growth prediction for 2022 to 3.9 percent, down from 4.2 percent earlier.
In February, the onset of war in Ukraine pushed oil prices above $139 a barrel, the highest level since 2008, escalating inflationary pressures.
And while several countries have contributed to efforts to expand supply by utilizing strategic oil reserves, oil prices remain above $100 or near it.
According to the report, the sharp rise in commodity costs, in combination with supply chain constraints that have persisted since the onset of the Covid-19 pandemic, with rising closures in China and around the world, all of this exacerbated inflation.
In the third quarter, however, global oil consumption is anticipated to reach 100 million bpd, as predicted by OPEC.
OPEC cut its expectation for Russian oil supplies by 530 thousand bpd from a current 11.23 million bpd.
Moreover, it stated that the forecast for global oil demand increase is still under assessment until additional clarification is available.