The Organisation of Petroleum Exporting Countries (OPEC) on Monday said that the world oil demand will drop in 2020 than previously forecast due to the coronavirus and witness a slower recovery than expected in 2021.
The Organisation in a monthly report disclosed that world oil demand will fall by 9.46 million barrels per day (bpd) this year which is more than the 9.06 million bpd decline expected a month ago.
The COVID-19 pandemic has curtailed travel and economic activity leading to a collapse in oil prices across the globe. While some countries have eased lockdowns, allowing demand to recover, a rising number of new cases and higher oil output have weighed on prices.
Speaking on the 2021 outlook, OPEC pointed out that the risks remain high and oil production has tilted to the downside. It also explained that the increased usage of teleworking and distance conferencing has limited transportation fuels from fully recovering to 2019 levels. This is potentially making it harder for the group and its allies to support the market.
The report also forecasts demand for OPEC crude will be lower than expected this year and next, as supply increases outside the group and because of the reduced global demand outlook.
The organisation, which constitutes 13 oil producing member countries, said demand for its crude this year will average 22.6 million bpd, down 700,000 bpd from the previous forecast. Next year’s forecast was cut by 1.1 million bpd.
OPEC and its allies known as OPEC+ are working towards tackling the drop in demand. Accordingly, the organisation and its allies have agreed to a record supply cut of 9.7 million bpd while the United States and other nations also agreed to pump less.
A monitoring panel of OPEC+ ministers have agreed to meet on Thursday to discuss the market.