Emmanuel Addeh in Abuja
The Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Dr. Sanusi Barkindo, has urged the global oil and gas industry to expect some level of uncertainty in the market in the coming weeks on the back of the new variant of COVID-19, Omicron.
Speaking at the opening of the 57th Meeting of the Joint Technical Committee (JTC) via videoconference) yesterday, Barkindo recalled that the World Health Organisation (WHO) had designated it a “variant of concern” prompting stock market and oil market declines after the announcement was made.
He added that scientists fear the emerging strain could possibly be more transmissible and have higher resistance to vaccines, adding that the news of the development has resulted in governments re-imposing restrictions and travel bans.
“New cases of the variant are being reported in various parts of the world with each passing hour, thus we will need to remain vigilant in assessing the impacts of this latest chapter in the pandemic, as especially it relates to our demand scenarios,” he noted.
He, therefore, urged the JTC, a meeting usually preceding the decisive policy conference every month, to examine this key development and other market issues in great detail.
Quoting from the recently-released world oil outlook, Barkindo said that in terms of the global economy, the 2021 and 2022 Gross Domestic Product (GDP) growth forecasts stand at 5.6 per cent and 4.2 per cent, respectively, unchanged from last month.
He added: “In spite of the steady progress that has been made on the economic recovery, we do expect significant levels of uncertainty in the weeks ahead, which could slow down the growth momentum.
“In addition to closely monitoring the evolving impacts of the Omicron mutation, other factors to consider will be the pace of vaccine rollouts worldwide, the uneven pace of economic growth across global regions, supply chain disruptions and tight labour markets with potentially longer-lasting effects on inflation, as well as high debt levels in both the government and private sectors.”
As far as demand is concerned, Barkindo reiterated that OPEC still foresees world oil demand increasing by 5.7 mb/d in 2021, revised lower by 0.16 mb/d from last month, mainly due to slower-than-anticipated demand from China and India during 3Q21.
In 2022, he noted that world oil demand is anticipated to increase by 4.2 mb/d, unchanged from last month while world total demand in 2021 is now pegged at 96.4 mb/d and at 100.6 mb/d in 2022, surpassing pre-pandemic levels.
In addition to the new Omicron variant, the OPEC helmsman said that COVID-19 cases continue to rise in other regions, particularly in Europe, saying that the subsequent restrictions and lockdowns are resulting in decreased consumption of transport fuels.
Plus the pandemic-related concerns, Barkindo stated that other demand-related uncertainties include trade tensions, ongoing supply chain backlogs, potential adverse weather conditions and evolving energy policy changes.
“In terms of the supply-side, non-OPEC supply in 2021 is expected to grow by 0.7 mb/d to average 63.6 mb/d, unchanged from last month. For 2022, non-OPEC supply growth is forecast at 3.0 mb/d for an average of 66.7 mb/d, also unchanged from last month.
“Additionally, we continue to monitor the ramifications of the announcement made last week regarding the coordinated total release of up to 70 million barrels of oil from the strategic reserves of major consuming countries,” he explained.
According to him, it is worth noting that OPEC’s latest projections indicate a potential global supply surplus as early as the first and second quarters of 2022.
On the upcoming 5th anniversary of the landmark Declaration of Cooperation in December, he stated that it was appropriate to laud the OPEC and non-OPEC member countries for all that they had achieved in the half-decade since the framework for multilateral energy cooperation was founded.
