| 21 May 2024, Tuesday |

Opec forecasts global economic rebound to sustain oil demand

Opec left its global oil demand forecast for 2021 stable in its monthly outlook report, due to an economic rebound in the second half of the year.

However, the bloc sees energy consumption in India, the world’s third-biggest consumer of oil, collapsing because of the surge in Covid-19 infections.

According to Opec’s monthly market report released on Tuesday,  the global demand forecast for 2021, will see an increase of 6 million barrels per day to an average of 96.5 million bpd for the year.

The growing number of infections in top energy-consuming countries such as India and Brazil will impact demand in the first half of the year. Slower-than-anticipated consumption in the Americas region of Organization for Economic Co-operation and Development countries in the first quarter also impacted Opec’s earlier forecast.

However, Opec said that these developments are likely to be offset by “positive weekly transportation fuels data from the US and the acceleration in vaccination program” in the second half of the year.

“The assumed return to normality and improved mobility will also positively influence regions such as the Middle East and Other Asia,” the group said.

However India, one of the fastest growing demand centers for crude, is expected to restrain its demand over the coming months. The South Asian nation has emerged as a Covid-19 hotspot, with local, highly infectious strains of the virus spreading quickly across the country.

India has registered nearly 23 million cases so far, according to Worldometer, which tracks the pandemic. The government has been reluctant to impose a nationwide lockdown similar to the curbs implemented last year, which severely crimped its overall demand for crude and led its economy to shrink 8 per cent in 2020.

The Vienna-based bloc expects to see higher growth from India’s industrial sector towards the second half of the year.

“A positive baseline impact of 2020, stimulus measures taken by the government to encourage private consumption and investment, and a pickup in vaccination rollouts towards the second half” will encourage growth, it said.

Demand for oil is also supported by the global economy rebounding return to growth of 6 per cent this year as most developed economies are expected to rebound, after the world economy contracted by 3.3 per cent in 2020.

Oil prices have gained more than 30 percent year to date, supported by a slow return to normality in some of the more developed states. Vaccination rollouts in OECD countries have also improved mobility, and demand for fuel products.

  • The National News