OPEC Raises 2021 Oil Demand by 6.6% to 5.95 bpd

By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries (OPEC) has raised its 2021 oil demand growth forecast in the hopes that the coronavirus impact wanes on the global economy.

In the latest forecast contained in its monthly report, the cartel noted that demand will rise by 5.95 million barrels per day in 2021, or 6.6 per cent, up 70,000 barrels per day from last month.

The raise in its forecast for growth in world oil demand this year is banking on hopes that the pandemic will subside, providing help for the group and its allies in their efforts to support the market.

However, OPEC lowered its forecast for the second quarter.

“As the spread and intensity of the COVID-19 pandemic are expected to subside with the ongoing rollout of vaccination programmes, social distancing requirements and travel limitations are likely to be scaled back, offering increased mobility,” OPEC said in the report.

The upward revision marks a change of tone from previous months, in which OPEC has lowered demand forecasts due to continued lockdowns.

A further recovery could bolster the case for OPEC and its allies, known as OPEC+, to unwind more of last year’s record oil output cuts.

Prices have risen to pre-pandemic highs above $70 this year, boosted by hopes of economic recovery and OPEC+ supply restraint and prices reacted positively to the news.

Business Post gathers that Brent was trading closer to $64 a barrel while the US West Texas Intermediate (WTI) is currently at $60 per barrel.

OPEC raised its forecast of 2021 world economic growth to 5.4 per cent from 5.1 per cent assuming the impact of the pandemic is “largely contained” by the beginning of the second half of the year.

Earlier this month, OPEC+ agreed to gradually ease oil output cuts from May, after the new US administration called on Saudi Arabia to keep energy affordable for consumers.

The report also showed higher OPEC oil output already as Iran, exempt from making voluntary cuts due to US sanctions, pumped more in March, driving a 200,000 barrels per day rise in the group’s output to 25.04 million barrels per day.

While Iran remains far short of output levels seen several years ago, it is in talks with the Vienna-based organisation to save an international deal under which the US agreed to lift some sanctions in exchange for curbs on Tehran’s nuclear programme.