OPEC raises forecast for global oil demand

On February 14, the Organization of the Petroleum Exporting Countries (OPEC) raised its forecast for global oil demand growth this year, the first increase in months. The group also lowered supply forecasts for Russia and other non-OPEC producers, anticipating a tightening oil market.

In its latest monthly report, OPEC predicted that global crude oil demand will increase by 2.32 million barrels per day this year, or 2.3%, to 102 million barrels per day, a forecast that is 100,000 barrels per day higher than last month's forecast. The organization pointed to the upward revision as the reopening of China will boost oil demand. OPEC raised its global growth forecast for 2023 from 2.5% to 2.6%. The report emphasized that the slowdown in economic growth relative to last year is still the general trend, inflation remains high, and interest rates are expected to rise further. The report pointed out that various potential negative factors in the international market still exist, but the upside factors include the possibility of the Federal Reserve achieving a soft landing for the US economy and further weakness in commodity prices.

OPEC said in the report that the organization's crude oil production capacity will drop by 49,000 barrels per day to 28.88 million barrels per day in January as production declines in Saudi Arabia, Iraq and Iran offset production growth elsewhere. OPEC also lowered its forecast for non-OPEC supply growth this year to 1.4 million bpd from 1.5 million bpd in January, citing lower-than-expected output in Russia and the United States.

Russia said last week that it plans to cut oil production capacity by 500,000 barrels per day in March. Russian oil production could fall in 2023 under the weight of Western sanctions. However, the UAE energy minister reiterated that the global crude oil market was in balance as demand growth in some regions was offset by slower demand in others.