OPEC has cut its forecast for global fourth-quarter crude oil demand on the back of the rise in prevalence of the Delta COVID-19 variant clouding the future demand picture, the cartel said on Monday.
The rise in COVID-19 infection rates across much of the globe in recent months has dampened demand d growth expectations, pushing a stronger recovery for the crude markets back to the first half of next year, OPEC said in its monthly market report.
The increasingly uncertain demand picture for October-December led the organisation to cut its estimates for the period but, set against a stronger than expected third quarter, total demand growth for the year stands at 6m bbl/day to a total of 96.7m bbl/day, largely unchanged from OPEC estimates last month.
The organisation significantly hiked its estimates for 2021 global demand, raising forecasts by 900,000 bbl/day compared to last month’s projections, to 100.8m bbl/day.
The resurgence in coronavirus cases on the back of the rise of the Delta variant has raised fears over future demand impact even in countries where larger proportions of the population have been vaccinated. Daily deaths in the US have surged to nearly 1,700, while parts of the UK are seeing the highest case numbers on record.
"A further rise in COVID-19 infections, especially considering the upcoming winter season in the Northern Hemisphere, could dampen current growth projections,” OPEC said.
“In addition, ongoing global supply chain disruptions, rising sovereign debt levels in many regions, together with inflationary pressures and central bank responses, remain key factors that require close monitoring,” it added.
The cartel also cut global non-OPEC crude supply growth estimates for the year by 170,000 bbl/day on the back of a 500,000 bbl/day downward adjustment for the third quarter as a result of Hurricane Ida disruption in North America and an offshore platform fire in Mexico.
Despite the overall bearishness, OPEC revised estimates for its own supply for 2021 up by 300,000 bbl/day to 27.7m bbl/day after agreeing to keep to a schedule of gradually hiking output. The organisation expect supply from its members to rise 1.1m bbl/day next year.
Global GDP growth is expected to slow towards the end of the year after the third-quarter rally, OPEC said, noting that a significant factor in the global recovery, particularly in thee west, has been government stimulus plans that are not expected to continue indefinitely.