The Organisation of Petroleum Exporting Countries has revised the demand for crude oil in 2022 downward following the concerns around global economic growth.
OPEC’s Secretary-General, Sanusi Barkindo, announced this at the 62nd Meeting of the Joint Technical Committee via videoconference.
He also stated that the loss of crude oil and other liquids exports of more than seven million barrels per day from Russia could not be replaced, as this was rippling through energy markets.
He said, “Global oil demand growth for 2021 remains similar to last month, at 5.7 million barrels per day, but 2022 growth has been revised down by 0.5mb/d to stand at 3.7mb/d. This mostly reflects the downward revision in world economic growth.
“On the supply side, non-OPEC supply growth in 2022 has been revised down by 0.3mb/d to 2.7mb/d, mainly on the back of a downward revision for Russia.”
Barkindo noted that given the uncertainties on the supply side, and that OPEC-10 crude oil spare production capacity stood at around 3.3mb/d, or roughly 3.3 per cent of global demand, it was positive to hear last week that the Caspian Pipeline Consortium was set to resume full exports after almost 30 days of disruptions following repairs on one of its key loading facilities.
“The CPC pipeline carries around 1.2mb/d. In terms of the Declaration of Cooperation and the production adjustments, the latest data shows that our conformity levels reached 157 per cent in March, and stand at 113 per cent overall since May 2020,” he stated.
The OPEC scribe added, “As of March 2022, participating countries were producing 2.37 million barrels more on a daily basis than in August of 2021. Some countries continue to produce under their agreed levels, with the shortfall at 1.45mb/d in March.”
Meanwhile, Barkindo noted that it was now clear that Russia’s oil and other liquids exports of more than 7mb/d could not be made up from elsewhere.
“The spare capacity just does not exist,” he stated, adding, “however, its potential loss, through either sanctions or voluntary actions, is clearly rippling through energy markets.
“The crises we face are causing huge volatility, with daily price swings of more than $5/b occurring on 13 occasions across March and April.”
He further stated that recent events and developments in the oil industry showed the continuing shift among policymakers to a better understanding of what was required in the energy transition.
“It is not about moving from one energy to another; it is about utilising all available energies and understanding the energy security dimension of our future to enable the necessary investments,” he stated.
Barkindo added, “This was clearly highlighted last month by US investment bank, JP Morgan in its first annual energy outlook.
“It said the world needs to find $1.3tn of incremental investment by 2030 to boost all types of energy output and infrastructure from renewables to oil and gas to avoid an energy crunch. What we are seeing is a wake-up call to all stakeholders.
“We need to ensure there is a clear pathway for all energy investments. Sustained investment in oil is required if we are to expand production and ensure adequate spare capacity, a vital cog in the oil market landscape.”