Delta variant could delay oil demand before 2022 growth – OPEC
The Organisation of the Petroleum Exporting Countries (OPEC), on Monday, September 13, cut down its world oil demand forecast for the last quarter of 2021 due to the Delta variant of the coronavirus.
OPEC said in a monthly report that it expects oil demand to average 99.70 million barrels per day (bpd) in the fourth quarter of 2021, down 110,000 bpd from the August forecast.
The organisation indicted that a further recovery would be partially delayed until 2021 when consumption would exceed pre-pandemic rates.
“The increased risk of Covid-19 cases, primarily fuelled by the Delta variant, is clouding oil demand prospects going into the final quarter of the year,” OPEC said in the report. “As a result, second-half 2021 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into first-half 2022″.
The organisation also noted that both the OECD and non-OECD drove the revisions. The recovery in various fuels is expected to be stronger than anticipated and further supported by a steady economic outlook in all regions.
Governments, companies and traders are closely monitoring the speed that oil demand recovers from last year’s crash.
A faster return could boost prices and challenge the view that the impact of the pandemic may curb consumption for longer or for good.
Despite the downward revision to the fourth quarter, OPEC said world oil demand in the whole of 2021 would rise by 5.96 million bpd, virtually unchanged from August.
The growth forecast for 2022 was adjusted to 4.15 million bpd, compared to 3.28 million bpd in last month’s report and an estimate of 4.2 million bpd given by OPEC sources during the group’s last meeting on September 1.
“The pace of recovery in oil demand is now assumed to be stronger and mostly taking place in 2022,” OPEC said.
“As vaccination rates rise, the Covid-19 pandemic is expected to be better managed and economic activities and mobility will firmly return to pre-Covid-19 levels,” they added.
Highest demand view
With the latest changes, OPEC still has the highest demand growth figures among the three main oil forecasting agencies – itself, the US government and the International Energy Agency.
OPEC and its allies, known as OPEC+, are gradually unwinding record oil output cuts put in place last year due to the pandemic.
In July, they agreed to gradually boost output by 400,000 bpd a month from August and confirmed the plan at their last meeting on September 1.
The report showed OPEC output rose in August by 150,000 bpd to 26.75 million bpd, led by Iraq and Saudi Arabia. An involuntary cut in Nigeria reduced the scale of the supply boost.