OPEC reduces its expectations for oil demand growth due to increasing global economic problems

Considering current global economic challenges, primarily high inflation levels and interest rates hikes, OPEC again reduced its forecasts for global oil demand growth for this year. The expected values are now even lower than before, and this reduction has become the fifth one in the last six months.

As it was stated in OPEC’s monthly report, this year’s oil demand is projected to grow by 2.5% to the level of 2.55 million barrels per day. That is 100,000 barrels a day lower than it was projected before.

It was also stated in the published report that due to increasing problems, the time of great uncertainty has come for the global economy.

Such things as record levels of inflation, tightening modes of monetary policies of leading central banks, notable sovereign debt levels in a number of countries, tight labor markets in many regions, and continuing constraints of supply chains are among the main downside risks mentioned in the report.

By this moment, OPEC forecasts the level of oil demand to grow by 2.24 million barrels per day in the following year. The new forecast is lower than the previous one by the same 100,000 barrels per day.

Nevertheless, OPEC’s expectations of the global economic growth for the current and the following years has remained unchanged despite the problems highlighted in the report. As it was noted by the Organization of the Petroleum Exporting Countries, even considering the existing risks that imply possible worsening of economic situation, there’s still some upside potential. 

According to a statement made by OPEC, a possible growth might be triggered by various factors, and any way of resolving of the geopolitical situation in Eastern Europe would have a positive impact on inflation, as it would provide a chance of shifting towards less hawkish monetary policy.