BAKU, Azerbaijan, Dec.8
By Leman Zeynalova - Trend:
The challenge for OPEC+ beyond 2022 may shift towards managing upside risks if demand surprises on the upside, the US shale and non-OPEC response remains limited, Iran fails to ramp up production and/or if outages and geopolitical disruptions become widespread, Trend reports with reference to the Oxford Institute of Energy Studies (OIES).
But if such a context does materialise, most OPEC+ members will be producing close to, or at, maximum capacity and the ability of OPEC+ to respond to shocks will diminish, according to the latest OIES report.
“Global oil demand growth is downgraded to 5.3 from 5.4 mb/d in 2021 and to 3.5 mb/d from 3.6 mb/d in 2022 and remains unchanged at 2.1 mb/d in 2023. Although the emergence of the Omicron variant adds new downside risks to the outlook, we remain cautious about the extent of negative effects on oil demand recovery which is seen slowing down rather than reversing. An immediate near-term impact is seen in the OECD in terms of regions and on jet fuel demand in terms of products, but negative effects could be quickly reversed. In the non-OECD, China’s oil demand is headed towards a soft start to 2022, but growth still has upside potential in H2,” reads the report.
OIES notes that global supply growth is upgraded to 1.5 mb/d from 1.3 mb/d in 2021, but growth is lowered to 5.7 mb/d from 5.9 mb/d in 2022 and to 1.8 from 2.2 mb/d in 2023.
“The ability of OPEC+ producers to meet their targets will be a key dynamic in 2022, as involuntary compliance is expected to rise. As non-OPEC supply continues to recover, crude oil production growth remains unchanged at 2 mb/d in 2022, underpinned mainly by US, Russia and Canada,” said the Institute.
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