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OPEC Retains Expectations of Accelerated Oil Demand in H2 2021

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By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries (OPEC) still expects the global economy to accelerate in the second half of 2021, keeping its forecast of oil demand growth unchanged.

This was contained in its newly published in its latest monthly forecast, explaining that the recovery will be led by the United States and China.

The cartel said demand would rise by 6.6 per cent or 5.95 million barrels per day this year, unchanged for a second consecutive month.

“The recovery in global economic growth, and hence oil demand, are expected to gain momentum in 2H21,” OPEC said in the report.

It noted that its efforts, with support from its allies jointly known as OPEC+, “have substantially led the way towards a market rebalance. This foresight, along with an ongoing joint vigilant monitoring of developments, continues to support the oil market, in tandem with the expected recovery in the various economic sectors.

“Global economic recovery has been delayed due to the resurgence of COVID-19 infections and renewed lockdowns in key economies, including the Eurozone, Japan and India,” the group said in the monthly report.

“The ongoing vaccination efforts, a growing share of recovered cases leading to increasing herd immunity, and the easing of lockdown restrictions lend optimism that the pandemic could be contained in the few months to come.”

According to the analysis, OPEC’s 13 members, which includes Nigeria will be able to pump 28.66 million barrels per day in the third quarter of the year and 29.39 million barrels per day in the fourth quarter without creating a supply surplus.

Global oil demand will be 96.58 million barrels per day in 2021, up 5.95 million barrels per day from 2020 when the demand estimate was revised up to 90.63 million barrels per day.

Supply from outside of OPEC is forecast to average 63.73 million barrels per day in 2021, an increase of 840,000 barrels per day from 2020, OPEC said. The 2021 figure is a 130,000 barrels per day upward revision from last month’s report, largely due to a faster-than-expected recovery in the US in March, OPEC said.

The OPEC+ alliance, which collectively controls about half of global crude production capacity, is scheduled to meet online on July 1 to assess market conditions and review plans to bring more output into the market.

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