OPEC expects robust demand despite India's crisis
Shafaq News/ OPEC on Tuesday pinned hopes on a strong recovery in world oil demand in 2021 as growth in China, and the United States counters the coronavirus crisis in India, an outlook that bolsters the group's plan to gradually ease output cuts.
In a monthly report, the Organization of the Petroleum Exporting Countries said demand will rise by 5.95 million barrels per day (bpd) this year, or 6.6%. The forecast was unchanged from last month.
The report's optimism comes even as it warns of "significant uncertainties," mainly around the pandemic, and as concern about India weighs on oil prices. Crude fell after the report was released but is still up 30% this year at near $68 a barrel.
"India is currently facing severe COVID-19-related challenges and will therefore face a negative impact on its recovery in the second quarter, but it is expected to continue improving its momentum again in the second half of 2021," OPEC said in its monthly report.
In the report, OPEC cut its oil demand forecast for the second quarter by 300,000 bpd, and raised its estimate for the third quarter by 150,000 bpd and by 290,000 bpd for the last three months of 2021.
OPEC now sees 2021 world economic growth at 5.5%, up from 5.4% last month, assuming the impact of the pandemic will have been "largely contained" by the beginning of the second half.
"The recovery is very much leaning towards the second half," OPEC said.
The report also showed slightly higher OPEC oil output already as Iran, exempt from making voluntary cuts due to U.S. sanctions, pumped more in April, driving a 30,000 bpd rise in the group's output to 25.08 million bpd.
The organization said that OPEC Reference Basket averaged $63.24 a barrel last April, down by $1.32 from the previous month.
The report showed "an increase in global economic growth, which has been revised down by 0.1 percent to 5.5 percent, is expected, coming after a contraction of 3.5% on an estimated annual basis for the global economy in 2020."
It noted, "the global economy is still growing in 2021 fraught with uncertainties, including the spread of COVID-19 variants and the speed of global vaccine rollout. In addition, sovereign debt levels in many regions are inflationary."
The report explained, "Global demand for oil is expected to increase by 6 million bpd, unchanged from last month’s estimates, by an average of 96.5 million bpd, after it decreased by 9.5 million bpd in 2020."
The OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Djeno (Congo), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).