OPEC stuck to its expectation of a strong recovery in global oil demand in 2021, led by the United States and China, despite the uncertainty caused by the pandemic, and indicated the need for the organization to pump more oil.
The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report that demand will rise 6.6%, or 5.95 million barrels per day, this year. This forecast did not change for the second month in a row.
The forecast, which was mentioned in the report, comes even after a slower recovery than expected in the first half, while warning of “great uncertainty” surrounding the pandemic, such as the possibility of new strains of the Corona virus emerging.
“The recovery of the global economy has been delayed due to the resurgence of high cases of (Covid 19) and renewed closures in major economies, such as the euro area, Japan and India,” OPEC said in its monthly report.
“Overall, the recovery in global economic growth, and thus oil demand, is expected to gain momentum in the second half” of the year, she added.
Although the United States is expected to make the largest contribution to demand growth in 2021, OPEC said that demand in OECD countries will not fully recover from the collapse it witnessed in 2020.
Oil continued to rise above $72 a barrel after the report was released, and the price has increased 39% since the beginning of the year thanks to rising demand and supply cuts by OPEC and its allies within the OPEC + framework.
OPEC expects the global economy to grow by 5.5% in 2021, unchanged from the previous month, assuming that the impact of the pandemic has been “largely contained” by the beginning of the second half.
“The ongoing vaccination efforts, the growing share of recovered cases, which leads to increased herd immunity, and the easing of lockdown restrictions give rise to optimism that the pandemic may be contained in the next few months,” OPEC said.
OPEC + agreed in April to gradually ease oil production cuts from May to July and confirmed the decision at a meeting on June 1. Most of the production cuts will continue after July.
OPEC said that the efforts of OPEC + “fundamentally contributed to leading the way towards rebalancing the market.”
The report showed greater oil production by OPEC, which reflects the decision to pump more and increases from Iran, which is excluded from making voluntary cuts due to the US sanctions imposed on it.
OPEC said that production rose in May by 390,000 barrels per day to 25.46 million barrels per day.
Saudi Arabia told OPEC that it increased production in May by 410,000 barrels per day to 8.54 million barrels per day, a figure that exceeds that mentioned by the Saudi Energy Minister on the first of June.
In its report, OPEC kept an estimate of the amount of oil it needs to pump this year stable at 27.7 million barrels per day, even after a limited upward adjustment of non-OPEC supply.
In theory, this allows for further easing of the OPEC+ cuts in the second half of the year.
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