As economic growth slows, OPEC reduces its predictions for oil consumption

The Organization of the Petroleum Exporting Countries reported that global oil supplies are gradually catching up with declining crude demand, leaving the market nearly balanced and indicating that the cartel does not now see a need to expand its output further.

The producers’ organization, which has its headquarters in Vienna, reduced its predictions for the world’s oil consumption this year by 260,000 barrels, to 100.03 million barrels per day, citing the weakening global economies. Additionally, it decreased its anticipated demand for 2023 by the same amount, to 102.72 million barrels per day.

According to OPEC’s monthly market report released on Thursday, global economic growth will be less than anticipated both this year and the following year as inflation burdens firms and consumers and central banks hike interest rates to tamp down increasing prices.

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OPEC revised its 3.5% growth projection for the world GDP in 2022 to a forecast of 3.1% growth. OPEC reduced its growth projections for the US economy from 2.1% last month to 1.8% this year and from 3% to 1.7% in 2023.

The second-largest economy in the world, China, is anticipated to develop by 4.5% this year, which is 0.6 percentage points less than OPEC expected in July.

In the second quarter of the year, the oil market was almost in balance, with demand outpacing supply by just 50,000 barrels per day due to a combination of decreased oil demand and steadily rising output from OPEC and non-OPEC oil producers.

This contrasts with an oil deficit of 300,000 barrels per day in the first quarter and 1.6 million barrels in 2021. For OPEC+, an association of oil-producing nations that oversees more than half of global output, high oil prices have proved advantageous. Shelby Holliday of the Wall Street Journal outlines what the OPEC+ countries are doing with the extra money and why they aren’t going to distance themselves from Russia.

Analysis by: Advocacy Unified Network