Oil prices have reached their highest level in years this week, yet OPEC is more cautious in estimating demand for the commodity.
The oil country cartel estimates the total need in 2021 is lower than previously estimated. At the same time, the supply from non-members is likely to be lower than initially expected, OPEC writes in a new report.
The weakened expectations stand out during the energy crisis in Europe and elsewhere. Gas and electricity prices have risen sharply because the demand for energy worldwide is increasing. Oil hadn’t been as expensive since 2014 as it was in recent days.
Still, OPEC is scaling back expectations on oil demand. The union expects demand to rise this year by an average of 5.8 million barrels of crude oil (159 litres) per day. In last month’s OPEC report, the organization mentioned nearly 6 million additional barrels per day. In addition, OPEC acknowledged that increased gas prices could boost oil demand. But earlier this year, actual oil consumption fell short of expectations, hitting annual forecasts.
Major oil-producing countries that are not members of OPEC are expected to supply 700,000 barrels per day, 300,000 less than earlier forecasts. This is partly due to the impact of Hurricane Ida in the United States.
Iraq, a member of OPEC, does not expect oil prices to rise further. “The market should now be in balance,” Iraqi oil minister Ihsan Abdul Jabbar replied at a Russian energy conference when asked whether oil production should increase.