Source: Reuters
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  • The Organisation of the Petroleum Exporting Countries (OPEC) has cut its forecast for growth in world oil demand in 2022
  • This is due to the impact of Russia’s invasion of Ukraine, rising inflation as crude prices soar and the resurgence of the Omicron coronavirus variant in China
  • In a monthly report, OPEC said world demand would rise by 3.67 million barrels per day (bpd) in 2022, down 480,000 bpd from its previous forecast
  • The invasion of Ukraine sent oil prices soaring above US$139 (A$193) a barrel, the highest since 2008

The Organisation of the Petroleum Exporting Countries (OPEC) has cut its forecast for growth in world oil demand in 2022 citing the impact of Russia’s invasion of Ukraine, rising inflation as crude prices soar and the resurgence of the Omicron coronavirus variant in China as factors.

In a monthly report, OPEC said world demand would rise by 3.67 million barrels per day (bpd) in 2022, down 480,000 bpd from its previous forecast.

The invasion of Ukraine sent oil prices soaring above US$139 (A$193) a barrel, the highest since 2008, worsening inflationary pressures.

“While it is forecast that both Russia and Ukraine will be facing recessions in 2022, the rest of the global economy will be thoroughly impacted as well,” OPEC said in the report.

“The strong rise in commodity prices in combination with ongoing supply-chain bottlenecks and COVID-19-related logistical logjams in China and elsewhere are all fuelling global inflation.”

Even so, world oil consumption is expected to surpass the 100 million bpd mark in the third quarter, as OPEC has predicted.

On an annual basis according to OPEC, the world last used more than 100 million bpd of oil in 2019.

OPEC said inflation was also a major factor impacting the world economy and lowered this year’s economic growth forecast to 3.9 per cent from 4.2 per cent and said there was a chance of a further cut.

“Further downside risks to this forecast are estimated to be considerable, to stand at more than half a percentage point, especially if the current situation extends into the second half of 2022 or even worsens,” the report said.

OPEC expects U.S. tight oil supply to rise by 880,000 bpd in 2022, up from 670,000 bpd last month.

The organisation also said there was potential for further expansion even though most US oil companies are still focusing on capital discipline.

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