OPEC

OPEC cuts world oil demand forecast amid soaring fuel costs

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High energy prices are likely to mean less oil demand this year, the Organization of the Petroleum Exporting Countries (OPEC) said in its closely watched Monthly Oil Market Report released on Thursday (Nov. 11).

The cartel said global demand for oil would grow by 5.7 million barrels a day this year, 160,000 barrels a day less than it expected in the previous month. OPEC also noted the downward revision is mainly due to “slower than anticipated” demand from China and India in the third quarter.

“A slowdown in the pace of recovery in the fourth quarter of 2021 is now assumed due to elevated energy prices,” the OPEC report said.

The revision means the oil-producers group now sees global oil demand set to reach 96.4 million bpd in 2021, while world oil demand for 2022 is expected to reach 100.6 million bpd.

Opec crude demand
(Source: OPEC)

Brent crude has gained more than 60% this year. Prices for a wide range of energy commodities such as natural gas and coal have also soared in recent month amid a global energy crunch.

The annual inflation rate in the US surged to 6.2% in October, the fastest rate in 30 years, driven largely by soaring energy prices, plaguing the American consumer, data revealed on Wednesday (Nov. 10),

The Biden Administration has found itself in hot water over the high crude oil and gasoline prices and has repeated calls on OPEC+ alliance, made up of OPEC members led by Saudi Arabia and non-member top producers guided by Russia, to increase production.

OPEC and its allies “will continue to review the market conditions on a regular basis, reaffirming the participating countries’ commitment to ensure adequate supply and support efforts to maintain global oil market stability,” the report stated.

The Vienna-based group next meets Dec. 2 to decide on January production levels. Meanwhile, governments, companies and traders are closely monitoring the speed with which oil demand recovers.