OPEC on Monday trimmed its world oil demand forecast for the last quarter of 2021 owing to the Delta COVID-19 variant, saying a further recovery would be delayed until next year when consumption will exceed prepandemic rates.
The Organization of the Petroleum Exporting Countries said in a monthly report it expects oil demand to average 99.70 million barrels a day in the fourth quarter of 2021, down 110,000 b/d from last month’s forecast.
“The increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year,” OPEC said in the report.
“As a result, second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022.”
Governments, companies and traders are closely monitoring the speed that oil demand recovers from last year’s crash. A faster return, as predicted by OPEC, could boost prices and challenge the view that the impact of the pandemic may curb consumption for longer or for good.
Oil was trading above US$73 a barrel after the report was released. Prices have increased more than 40 per cent this year, boosted by economic recovery hopes and OPEC+ supply cuts, although concern about the Delta variant has weighed.
Despite the downward revision to the fourth-quarter, OPEC said world oil demand in the whole of 2021 would rise by 5.96 million b/d or 6.6 per cent, virtually unchanged from last month.
The growth forecast for 2022 was adjusted to 4.15 million b/d, compared with 3.28 million b/d in last month’s report and an estimate of 4.2 million b/d given by OPEC sources during the group’s last meeting on Sept. 1.
“The pace of recovery in oil demand is now assumed to be stronger and mostly taking place in 2022,” OPEC said.
“As vaccination rates rise, the COVID-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-COVID-19 levels.”
With the latest changes, OPEC still has the highest demand growth figures among the three main oil forecasting agencies – itself, the U.S. government and the International Energy Agency, an adviser to consuming countries which issues its latest monthly report on Tuesday.
OPEC and its allies, known as OPEC+, are gradually unwinding record oil output cuts put in place last year owing to the pandemic. In July, they agreed to gradually boost output by 400,000 b/d a month from August and confirmed the plan at their last meeting on Sept. 1.
The report showed OPEC output rose in August by 150,000 b/d to 26.75 million b/d, led by Iraq and Saudi Arabia. An involuntary cut in Nigeria reduced the scale of the supply boost.
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