Opec maintains 2022 outlook and expects oil demand to surge beyond pre-Covid levels

The group expects higher demand next year on the back of improved economic activity

Drilling platforms are seen off the southern California coast. Opec also revised lower liquids supply this year from countries outside of its group. Non-Opec supply growth has been revised by 300,000 bpd to reach 700,000 bpd for 2021. AFP
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Opec, the crude oil exporters' group, maintained its outlook for oil demand in 2022 and continues to see consumption surging above pre-pandemic levels in 2022, it said in its latest monthly market report.

The Vienna-based group maintained its oil demand forecast for next year, keeping it unchanged at 100.8 million barrels per day, amid continuing growth for the global economy.

Opec attributed its forecast to improved economic activity, as "pandemic-related risks" are well managed dowing ue to higher vaccination rates and better treatment for those infected.

The group, however, trimmed its outlook for 2021, expecting consumption to rise by 5.8 million bpd compared with its previous estimate of six million bpd.

"Despite positive assumptions on oil demand going into the final quarter of the year, supported by seasonal petrochemical and heating fuel demand as well as the potential of switching from natural gas to oil in the power generation sector, the downward revision mainly takes into account actual data," Opec said in its report.

Crude has rallied to three-year highs, trading above $80 per barrel amid a global shortage in energy supply.

Brent edged close to $85 this week but pared gains to trade at $82.67 per barrel, down 0.9 per cent at 3.57pm UAE time while West Texas Intermediate was down 0.89 per cent at $79.96 per barrel. But both benchmarks have been trading at three-year highs of above $80 per barrel.

Opec said it expects demand for products such as petrol and diesel to increase, supported by a recovery in mobility and industrial activity.

Oil demand for the current year is expected to average 96.6 million bpd. Opec revised lower forecasts for demand in Organisation for Economic Co-operation and Development regions and countries outside the club of the world's most developed nations.

"While the downward revision in OECD regions focused on 1H21, non-OECD revisions were concentrated in 3Q21," the report said.

Opec also revised lower liquids supply this year from countries outside its group. Non-Opec supply growth has been revised by 300,000 bpd to reach 700,000 bpd for 2021.

The lower estimates come on the back of output shut-ins along the US Gulf of Mexico caused by Hurricane Ida, maintenance at a Kazakh oil field as well as a force majeure at an oil sands site in Canada.

"The impact of the hurricane led to a downward revision in US liquids supply in 2021 from growth of 100,000 bpd to a contraction of 100,000 bpd. The main growth drivers for 2021 supply growth continue to be Canada, Russia, China, Norway, and Brazil," the report said.

Opec, with non-member countries led by Russia, earlier this month agreed to bring 400,000 bpd back to the market as part of an incremental increase in supply, which will result in two million bpd returned by year-end.

Separately, Russian leader Vladimir Putin said during an energy conference that he expected to see the Vienna group sustain its commitments through to the end of 2022.

"We believe the Opec+ agreement will be in force until the end of next year. At the same time, the results show that co-operation between our countries has the potential for further development," he told Russia Energy Week on Wednesday.

Updated: October 13, 2021, 3:33 PM