The Organisation of Petroleum Exporting Countries (OPEC) has maintained the global economic growth forecasts for 2021 and 2022 as 5.5% and 4.2%.
In his remarks at the Joint Technical Committee’s virtual 59th meeting (videoconference), OPEC Secretary-General, Mohammad Barkindo, said, while it still envisaged healthy economic growth in the next two years, it was keeping a close eye on the ongoing volatility in the market.
The fluctuations in the market are due to a combination of rising inflationary pressures, ongoing supply chain disruptions, and central bank policy decisions.
According to Barkindo, US Federal Reserve officials met on Jan 29 and announced that they were unwinding the generous stimulus measures they introduced following the COVID-19 pandemic.
“Citing a strong labour market and rapidly rising inflation, the Fed said it would most likely raise interest rates in the months to come, potentially starting next month.
“This is going to be a year in which we move steadily away from the very highly accommodative monetary policy that we put in place to deal with the economic effects of the pandemic,” he said quoting the Fed. Chairman Jerome Powell.
According to Barkindo, looking at the demand picture in 2021, global oil demand will increase by 5.7 million barrels per day (mb/d), and by 4.2 million barrels per day (mb/d).
While the impact of Omicron variants is projected to be mild and short-lived, there is still uncertainty regarding new variants and renewed mobility restrictions amid steady global economic recovery.
According to him, the non-OPEC supply was expected to grow by 700,000 barrels per day in 2021 to average 63.7 million barrels per day (mb/d) unchanged from last month.
Specifically, he noted that non-OPEC supply growth was forecast at 3.0 million barrels per day for an average production of 66.7 million barrels per day, also unchanged from last month.
“We are also continuing to assess the potential near-term impacts if some leading consuming countries carry through with their announced plans to release an estimated 70 mb from their strategic oil reserves.
“Looking at inventories, preliminary December 2021 data showed that total Organisation for Economic Cooperation and Development (OECD) commercial oil stocks fell by 31.2 mb m-o-m to stand at 2,725 mb.
“This is 311 mb lower than the same time one year ago and 202 mb below the 2015-2019 average.
“Given the significant uncertainties related to the outlook on demand and non-OPEC supply growth, we will consider three scenarios today that were developed by the Secretariat to provide insight into the direction of the market.
He noted that in December 2021, OPEC-10 and the participating non-OPEC countries achieved overall conformity levels of 127 per cent and 114 per cent, respectively.
Barkindo added that overall conformity levels for OPEC-10 with the participating non-OPEC countries was 122 per cent.
