OPEC cuts oil forecasts for fifth time amid growing economic headwinds
OPEC cut its forecasts for global oil demand this year for a fifth time since April – further cutting into next year’s projected figures.
The cartel justified its calculations on mounting economic challenges including high inflation and rising interest rates.
It said oil demand would increase by 2.55m barrels per day, around 2.6 per cent, in its latest monthly report – down 100,000 bpd from previous forecasts.
OPEC said: “The world economy has entered a period of significant uncertainty and rising challenges in the fourth quarter of 2022.
“Downside risks include high inflation, monetary tightening by major central banks, high sovereign debt levels in many regions, tightening labour markets and persisting supply chain constraints.”
The report is expected to be the final update before the extended group, OPEC+, meets next month.
Next year, OPEC expects oil demand to rise by 2.24m bpd, also 100,000 bpd lower than previously forecast.
OPEC said: “This may come from a variety of sources. Predominantly, inflation could be positively impacted by any resolution of the geopolitical situation in Eastern Europe, allowing for less hawkish monetary policies,”.
Oil maintained its decline after the report was released, with Brent Crude trading at $93.26 per barrel while WTI Crude is trading at $85.97 per barrel.
This is a drop of 2.84 per cent and 3.36 per cent respectively.