The Organisation of Petroleum Exporting Countries (OPEC) has slashed its 2021 projection for global oil demand to 96 million barrel of crude as against 102 million barrels, a target set before the outbreak of COVID-19 earlier in the year.
The Secretary-General of the organisation, Mohammed Barkindo, who made the disclosure said the current global oil demand was slightly above 90 million b/d.
This current threshold, according to him, “represents a sharp decline of nearly 10 million b/d from where we started the year, and almost an 11 million b/d contraction compared to what we forecast for the year back in January.”
Speaking at the OPEC’s Crescent Ideas Forum (video conference) during the week, Barkindo stated, “In 2021, we expect growth to bounce back to 6.2 million b/d, to just over 96 million b/d, compared to our pre-coronavirus expectations for demand reaching almost 102 million b/d next year.”
He explained that the recent revisions were due to the easing pace of the economic recovery and recent COVID-19 containment measures, which are assumed to impact transportation and industrial fuel demand well into next year.
According to him, “The crucial market rebalancing efforts are further complicated by high stock levels. Preliminary data for October shows that total OECD commercial oil stocks were 208 million barrels above the latest five-year average, compared to 13 million barrels below the five-year average in January of this year.”
The OPEC scribe explained that total global inventories had surged by more than one billion barrels since the beginning of this year. “These figures would have been dramatically higher – and clearly unsustainable – had it not been for the unprecedented cooperative efforts taken to address the imbalance in fundamentals and stabilise the market.
He said, “In April, we delivered an unprecedented response to an unparalleled market shock, by adjusting output down by 9.7 million b/d, or roughly 10% global demand at the time.”
Sounding very optimistic, Barkindo said global oil demand would peak at 104 million barrel by 2025.
He said, “The outlook for crude oil may look anaemic now, but we anticipate a gradual normalisation of demand growth as the world recovers from the COVID-19 shock. Our analysts foresee global oil demand returning to relatively robust annual growth and reaching nearly 104 million b/d by 2025.
“In the longer term, there are a number of factors that will drive consumption, such as population and economic growth, especially in developing and emerging economies. We expect the global economy to more than double from 2019 to 2045, to $258 trillion, and the population to grow by at least 20%, to 9.5 billion.