OPEC+ Cuts Global Oil Demand Forecast For This Year

• OPEC’s technical panel has cut the oil demand forecast by 200,000 bpd for 2022.O

• OPEC now sees global demand grow by 3.4 million bpd this year.

• OPEC+ is not expected to significantly raise its production cap at its meeting this Thursday.

The technical panel of the OPEC+ group has reduced its global oil demand forecast for 2022 by 200,000 barrels per day (bpd) ahead of the alliance’s meeting on Thursday, Energy Intelligence reports.

The Joint Technical Committee (JTC) held its regular meeting today to review oil market developments ahead of Thursday’s meeting of the Joint Ministerial Monitoring Committee (JMMC) that would be followed by the OPEC+ ministerial meeting, OPEC said on Wednesday, without providing details of the discussions.

According to a report for the JTC to review, global oil demand is now expected to grow by 3.4 million bpd this year, with the geopolitical situation and COVID developments cited as key risks to the forecast, Energy Intelligence reports.

Last month, OPEC revised down its global oil demand growth estimate for 2022 a second month running. OPEC said in the middle of May that oil demand would grow by 310,000 fewer barrels per day than the growth anticipated in the April report.

OPEC+ meets on Thursday, and it is widely expected to rubberstamp its moderate monthly increases in oil production when it decides output levels for July. Despite the EU ban on most Russian oil imports, the alliance is unlikely to increase production quotas more than planned, according to numerous reports of the past few days.

Some OPEC members are mulling over the possibility of suspending Russia from the OPEC+ deal that limits the amount of crude oil that each member can produce, the Wall Street Journal reported on Tuesday, citing OPEC delegates.

Suspending Russia’s role in the group could allow other members to increase oil production at a quicker pace—although there are only a few OPEC members believed to have the capacity to ramp up production as quickly as the current deal allows.

Meanwhile, Russian Foreign Minister Sergei Lavrov visited Saudi Arabia on Tuesday and met with his Saudi counterpart Prince Faisal bin Farhan Al Saud. The ministers praised the OPEC+ deal and the cooperation between Russia and Saudi Arabia in the oil market, Russia says.

NB: Tsvetana Paraskova wrote this article for Oilprice.com