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OPEC revises down growth in oil demand

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In its latest forecast, OPEC has cut its estimates for growth in the demand for crude oil this year and next year.

The developments add some insight into the recent decision made by the OPEC+ group to support the market with a large production cut. Among the reasons for this, OPEC refers to the resurgence of measures to contain COVID-19 in China, high levels of inflation, and economic slowdowns.

In its report, it said:

“The world economy has entered into a time of heightened uncertainty and rising challenges, amid ongoing high inflation levels, monetary tightening by major central banks, high sovereign debt levels in many regions as well as ongoing supply issues.”

Nevertheless, the organisation still expects the demand for crude oil to surpass pre-pandemic levels next year, with it increasing by 2.34 million barrels per day (bpd) to reach an average of 102.02 million bpd, some 360,000 bpd lower than its previous estimate. Even with the downgrade, this is still higher than equivalent forecasts from both the US Department of Energy and the International Energy Agency.

Brent Crude oil prices have remained relatively stable at around $95 since OPEC+ announced its production cut, suggesting that the markets are not overly concerned about a supply shortage at this point.

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