OPEC keeps 2022 demand outlook steady, says long Ukraine war would cut investments
15th March 2022 14:22 GMT

In its first market outlook since Russia invaded Ukraine, OPEC March 15 kept its 2022 global oil demand forecast of 4.15 million b/d year-on-year growth but said any sustained effects from the war would lead to reduced investments and lower consumption.

With the US and Europe calling on oil producers to boost output in the face of bans on Russian crude, demand for OPEC crude is growing.

In its closely watched monthly market report, OPEC said the call on its crude will grow to 29.03 million b/d this year, compared with last month's estimate of 28.92 million b/d and after 28 million b/d in 2021.

UK news outlets have reported UK Prime Minister Boris Johnson is flying to Saudi Arabia on March 15 to seek more supplies of oil and gas to make up for lost Russian barrels. Even the UAE ambassador to the US has said the Gulf producer will put pressure on OPEC to increase oil production.

OPEC said oil demand will average 100.90 million b/d in 2022, with growth accelerating in the second half, after averaging 96.74 million b/d in 2021.

The market is still being challenged by COVID-19, according to OPEC, but the Ukraine war has led to more uncertainties from escalating global inflation and disruptions to trade flows and transportation logistics.

The effects, if sustained, will lead to a decline in consumption and investments to varying degrees, OPEC said.

"It is clear that uncertainty will dominate in the remaining months of 2022, i.e. uncertainty with regard to the scope and impact of the current geopolitical turmoil, restrictions and restructuring of production and trade flows, uncertainty on to what degree this will impact inflation and oil demand, and how this will serve to accelerate the drive towards energy transition, particularly in Europe," OPEC said.

"Given this unprecedented level of uncertainty, the forecast for total global oil demand growth for 2022 also remains under assessment at 4.2 million b/d, until more clarity prevails. In light of these highly volatile times, the safeguarding of market stability will remain paramount to both oil producing and consuming countries."

With the bloc pumping 28.47 million b/d in February, up 440,000 b/d from January, according to secondary sources used by OPEC to track output, the group is still challenged to meet demand.

Many analysts have noted shrinking OPEC spare production capacity, which is mostly concentrated in Saudi Arabia and the UAE, while several other countries appear to be already pumping as much as they can or at severe risk of disruptions.

OPEC, along with 10 Russia-led allies, has been gradually easing back the extreme production quotas it instituted at the start of the pandemic, aiming to return to pre-pandemic output by late 2022, though the majority of members are producing well under their allocations. The next OPEC+ meeting is March 31.

Bunkerworld .,
15th March 2022 14:22 GMT