OPEC is more bullish on the global economic recovery for next year, projecting world oil demand to exceed pre-pandemic levels in 2022, while the bloc and its allies plan to continue gradually raising crude output.
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In its closely watched oil market forecast released Sept. 13, OPEC raised its forecast of 2022 global demand growth to 4.15 million b/d, a hefty hike from last month's 3.28 million b/d. It said the higher 2022 estimate, with demand now expected to hit 100.83 million b/d for the year, was driven by a stronger than anticipated recovery in various fuels and a steady economic outlook in all regions.
The 2021 demand growth forecast was kept largely unchanged, at 5.96 million b/d from 2020 levels.
At the same time, non-OPEC supply for 2021 is expected to increase by 170,000 b/d less than the organization had previously forecast, due to disruptions caused by Hurricane Ida and to offshore production issues in Mexico from a fire. The 2022 non-OPEC supply forecast was held largely steady.
If the forecasts hold true, the OPEC+ alliance should have more breathing room to increase production without jeopardizing the recovery in oil prices.
Dated Brent has been able to stay above $72/b so far in September.
The current supply accord between OPEC and 10 allies, including Russia, calls for the group to step up production by 400,000 b/d each month, which would have the alliance on pace to eliminate its historic 9.7 million b/d production cuts enacted in spring 2020 by late 2022.
Rising call on OPEC
But actually effecting those increases has proved challenging, with some members suffering from involuntary outages and disruptions, as well as maintenance. In August, the 23-country alliance lifted its output by just 50,000 b/d, according to the latest S&P Global Platts survey of production.
"Numerous uncertainties, including the continued COVID-19 impact on the global economic recovery, will require continued coordinated policies," OPEC said in the report. "Oil demand in 3Q21 has proved to be resilient, supported by rising mobility and travelling activities, particularly in the OECD. At the same time, the increased risk of COVID-19 cases primarily fueled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates."
OPEC pegged global demand for its crude for 2022 at 28.75 million b/d, about 1.12 million b/d higher than last month's forecast. For 2021, the call on OPEC crude was estimated at 27.67 million b/d.
OPEC pumped an average of 26.76 million b/d in August, according to secondary sources used by the organization to track output.