Gas prices are high today, but OPEC forecasts cooling oil demand next year

OPEC forecast that world oil demand will rise further next year, but at a slightly slower rate than in 2022, with consumption supported by better containment of the COVID-19 pandemic and still-robust global economic growth.

In a monthly report, the Organization of the Petroleum Exporting Countries (OPEC) said it expects world oil demand to rise by 2.7 million barrels per day (bpd) in 2023. This year’s growth forecast was left unchanged at 3.36 million bpd.

Oil use has rebounded from the pandemic-induced slump in 2020 and is set to exceed 2019 levels this year even as prices hit record highs. However, high crude prices and Chinese coronavirus outbreaks have eaten into 2022 growth projections.

“In 2023 expectations for healthy global economic growth amidst improvements in geopolitical developments, combined with expected improvements in the containment of COVID-19 in China, are expected to boost consumption of oil,” OPEC said in the report.

OPEC said its 2023 forecasts assume there will be no escalation of the war in Ukraine and that risks such as rising inflation do not take a heavy toll on global economic growth.

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The group and allies including Russia, known collectively as OPEC+, are ramping up output after record cuts put in place as the pandemic took hold in 2020.

In recent months OPEC+ has been undershooting targeted production increases owing to underinvestment in oilfields by some OPEC members and by losses in Russian output.

The report showed OPEC output bucked that trend in June, rising by 234,000 bpd to 28.72 million bpd.