OPEC lowered its forecast for world oil demand in 2020 but still sees a record-breaking rebound next year assuming the coronavirus will largely be under control.
In its latest monthly oil report, OPEC said demand will tumble by 9.06 million barrels per day (bpd) this year, up 110,000 bpd from the 8.95 million bpd decline expected a month ago.
“The downward revision is mainly to reflect weaker-than-expected data in 2Q20 in a few non-OECD countries, in addition to considering the recent adjustment to global GDP in 2020 from -3.7% in July to -4.0% in August,” the report stated.
But OPEC stayed with its projection that demand will surge in 2021 by around 7.0 million bpd to reach 97.6 million bpd. “The forecast assumes that COVID-19 will largely be contained globally with no major disruptions to the global economy,” it said.
To tackle the drop in demand, OPEC and its allies, known as OPEC+, agreed to a record supply cut of 9.7 million bpd that started on May 1, while the United States and other nations said they would pump less.
According to the report, OPEC’s output rose by 980,000 bpd to 23.17 million bpd in July, largely because Saudi Arabia and other Gulf members ended extra voluntary cuts they had made in June.
The report cautioned that “Large uncertainties prevail, possibly resulting in a negative impact on petroleum consumption going forward.” Jet fuel is expected to struggle to make up for lost demand next year while “gasoline demand will face pressure to return to 2019 levels amid high unemployment reducing commuter demand.”
“The persistence of these uncertainties will undoubtedly have significant ramifications on the current 2020/2021 oil demand projections, necessitating subsequent adjustments to the oil demand forecasts for both 2020 and 2021,” OPEC said.
It also said that the current surge of COVID infections in the U.S. “will need to be closely monitored, as a continuation of this trend may lead to an erosion in rebounding consumer confidence and spending behavior.”