OPEC: Oil demand will gain momentum in H2 2021

OPEC and its oil allies reached agreement Sunday to cut global production by 9.7 million barrels a day starting May 1, to shore up the world price in the face of a significant drop in the demand for oil because of the coronavirus pandemic.

The Organisation of Petroleum Exporting Countries has said that the demand for crude oil will gain momentum in the second half of 2021, beginning from Thursday.

OPEC Secretary-General, Mohammad Barkindo, disclosed this at the 31st Meeting of the Joint Ministerial Monitoring Committee, which was held via videoconference.

He said, “Oil demand is forecast to grow by six million barrels per day to
around 96.6mb/d on average for the year.

“Similar to the economy, growth in the second half of the year is expected to gain momentum, potentially surpassing 99mb/d in the fourth quarter.

On the supply side, Barkindo said the forecast by the organisation was that non-OPEC supply would grow by an estimated 0.8mb/d in 2021 for an average of 63.7mb/d.

He said, “We appear to be well on the road to recovery, with oil demand growth expected to accelerate in the second half of the year, however, let us be aware that there are still uncertainties that could entail risks for market stability.

“Firstly, we are not completely out of the danger zone with the pandemic. We have seen in recent days an uptick in the spread of the so-called Delta

Variant, which is highly infectious and could prey upon those sectors of the population who have not yet been vaccinated.”

He, however, noted that OPEC’s early numbers for 2022 indicated a significant imbalance between supply and demand from the second quarter of 2022 onwards.

The OPEC scribe stated that in the second quarter of next year, the forecast was that supply would exceed demand by 5.4mb/d, adding that in the third quarter, it would be by 3.6mb/d and by 2.3mb/d in the fourth quarter of 2022.

“Given all of the painful lessons and sacrifices over the last 16 months, this is a scenario that none of us would like to see materialise,” Barkindo stated.

He therefore called members and non-members of OPEC to begin to plan for the next chapter in the indispensable format that was the Declaration of Corporation process in stabilising the business, beyond April 2022.

Get more stories like this on Twitter and Telegram

Recommended Stories