OPEC lowers forecast for the 2022 global oil demand growth again
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OPEC has lowered its forecast for the 2022 global oil demand growth for the fifth time since April this year. It has also reduced the 2023 figures amid growing economic challenges ranging from high inflation to central banks hiking interest rates.
OPEC lowers forecast for 2022 global oil demand growth
The demand for oil in 2022 is set to rise 2.55 million barrels per day, equivalent to 2.6%. In its monthly report, the organization said that this drop will be from the 100,000 barrels per day made during the previous forecast.
OPEC said its decision was the rising global uncertainties and the challenges witnessed during the fourth quarter of 2022. The risks witnessed during the period include high inflation, hawkish stance by central banks, rising sovereign debt levels across regions, and much more.
The report is the last to be made before the next OPEC+ meeting on December 4. The group recently shut down production targets but added that it would remain cautious.
In 2023, OPEC anticipates that the oil demand will increase by 2.24 million barrels per day, which is also lower than the 100,000 barrels per day lower than what has been forecasted previously.
Despite OPEC commenting about the growing challenges, the organization has maintained a steady figure for the 2022 and 2023 global economic growth forecasts. It also added that the risks were low, but there was also potential for an upside.
“This may come from a variety of sources. Predominantly, inflation could be positively impacted by any resolution of the geopolitical situation in Eastern Europe, allowing for less hawkish monetary policies,” OPEC added.
OPEC cuts production target
Oil prices have weakened amid the fears of a recession. The OPEC+ production target for November was reduced by 100,000 barrels per day, and a higher reduction starting this month.
According to Saudi Arabia, the cut was needed to address the rising interest rates and the weakening global economy. However, US President Joe Biden has criticized the action, saying it was not a long-term outlook.
In October, OPEC reported that the output dropped to 29.49 million barrels per day, which is higher than what OPEC+ had pledged to reduce. Saudi Arabia has also reported a smaller plunge of 84,000 barrels per day, which brought the organization’s October output to less than 11 million barrels per day.