LONDON: OPEC has kept to its forecast that world oil demand will exceed pre-pandemic levels in 2022, but said Russia’s invasion of Ukraine and developments around the coronavirus pandemic pose a considerable risk.
In a monthly report released on Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast that world demand would rise by 3.36 million barrels per day (bpd) in 2022, extending a recovery from 2020’s slump.
The Ukraine war had sent oil briefly above $139 a barrel in March, the highest since 2008, worsening inflationary pressures.
COVID lockdowns in China, where a Beijing outbreak has prompted the resumption of mass testing, have curbed oil demand.
“Looking ahead, current geopolitical developments and the uncertain roll-out of the pandemic toward the end of the second half of the year continue to pose a considerable risk to the forecast recovery to pre-pandemic levels,” OPEC said in the report.
“Inflationary pressures are likely to persist and it remains highly uncertain as to when geopolitical issues may be resolved.
Nevertheless, oil demand is forecast at healthy levels in the second half of this year.“
The report expects world consumption to surpass the 100 million bpd mark in the third quarter, in line with earlier projections, and for the 2022 average to reach 100.29 million bpd, just above the pre-pandemic rate in 2019.
OPEC and its allies which include Russia, known as OPEC+, are ramping up output after record cuts put in place during the worst of the pandemic in 2020.
Still, OPEC+ has been undershooting the increases due to underinvestment in oilfields by some OPEC members and, more recently, losses in Russian output.
The report showed OPEC output in May fell by 176,000 bpd to 28.51 million bpd.