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OPEC Has Lowered Its Forecast For Global Oil Demand For 2020-2021

OPEC Has Lowered Its Forecast For Global Oil Demand For 2020-2021

OPEC lowered its forecast for global oil demand for 2020 and 2021 by 0.4 million barrels per day, now expecting it to fall by 9.5 million barrels per day this year and grow by 6.6 million barrels per day next year, the organization said in a September report.

"The forecast for the fall in global oil demand in 2020 was revised down by 0.4 million barrels per day compared to the August report, to 9.5 million barrels per day. Thus, demand is expected to reach 90.2 million barrels per day," the report says.

The deterioration in the forecast is mainly due to a decrease in economic activity in several countries in the Asia-Pacific region due to an increase in the number of cases of COVID-19 infection. For example, the demand for oil in India, Indonesia, Thailand, and the Philippines in the second quarter was much lower than initially expected. However, demand for oil in China exceeded expectations in the second quarter.

"For 2021, the forecast for global oil demand was also lowered by about 0.4 million barrels per day. OPEC expects that in 2021, demand will grow by about 6.6 million barrels per day and reach 96.9 million barrels per day," the document says.

OPEC notes that demand forecasts may be lowered again due to an increase in the incidence of coronavirus and difficulties associated with vaccination. The organization estimates that restrictions due to the pandemic and the remote operation of many businesses may prevent the full recovery of the transport sector next year to the levels of 2019.

In 2020, the global oil demand contraction is revised down further by 0.4 mb/d, now contracting by 9.5 mb/d, to average 90.2 mb/d. In the OECD, demand is revised higher by around 0.1 mb/d due to lesser-than-expected declines in all sub-regions during 2Q20. In the non-OECD, the 2020 oil demand outlook is revised lower by around 0.5 mb/d, due to weaker oil demand performance in Other Asia, particularly in India. Turning to 2021, the negative impact on oil demand in Other Asia is projected to spill over into 1H21. At the same time, a slower recovery in transportation fuel requirements in the OECD will limit oil demand growth potential in the region. Additionally, risks remain elevated and skewed to the downside, particularly in relation to the development of COVID-19 infection cases and potential vaccines. Furthermore, the speed of recovery in economic activities and oil demand growth potential in Other Asian countries, including India, remain uncertain. As such, 2021 world oil demand is now forecast to grow by 6.6 mb/d, some 0.4 mb/d lower compared with the previous month’s assessment to average 96.9 mb/d.

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