The Organization of the Petroleum Exporting Countries (OPEC) considers that The new omicron variant of Covid-19 will have a “slight and short-lived” impact on global demand for crude oil, so it expects consumption to exceed 100 million barrels per day in 2022, thus exceeding pre-pandemic levels.
In the latest edition of its monthly bulletin, the oil cartel confirms their expectations that world oil demand will grow in 2021 by 5.66 million barrels per day (mb/d), up to an annual average of 96.63 mb/d.
Regarding its forecast for 2022, the organization anticipates a growth in demand of 4.15 mb/d, up to a total of 100.79 mb/d, which, if finally confirmed, would mean the highest annual oil consumption.
In this sense, although the impact of the omicron variant is expected to be slight and short-lived, OPEC warns that “uncertainties persist” regarding the new variants and the renewed mobility restrictions, amid an otherwise steady global economic recovery, despite current inflation levels, supply chain bottlenecks and ongoing trade issues.
Likewise, heOPEC points out, in anticipation of the change in the monetary policy of several of the main central banks, such as the United States Federal Reserve or the Bank of England, that the monetary actions of these institutions are not expected to hamper the underlying momentum of global economic growth, but rather serve to recalibrate economies that would otherwise overheat.
However, he acknowledges that higher interest rates, coupled with the ongoing economic recovery in the US, will most likely appreciate the value of the dollar relative to other currencies, which may have some oil market implications, as a strong dollar may cause non-dollar denominated net importing economies to require more of their local currency to import crude oil.
However, he anticipates any decline in demand in the oil market as a result of tighter monetary policies It will likely be offset by increased demand associated with the holiday season and a slowdown in Covid-19 infections in the Northern Hemisphere, which should support an acceleration in oil consumption.
Thus, coupled with the ongoing strong oil demand forecast and continued efforts by OPEC member countries and their producing partners, “The oil market is expected to remain well supported through 2022.”