Growth expectations surrounding global oil demand for 2021 remained unchanged at an estimated growth projection of 96.6mb/d on average, new OPEC report shows.

This is despite the slight upward revision to global GDP (now standing at 5.6%, up by 0.1 pp) which is projected to mainly reflect in non-oil-intensive sectors. Thus, compared with 2020 figures, oil demand is expected to increase by around 6.0 mb/d.

Global oil demand for 2022 also remains unchanged from that of last month with the projection averaging 3.3 mb/d on a year-on-year basis. The report indicates that total world oil demand is projected to go beyond 100 mb/d threshold in H2 2021 and reach 99.9mb/d on average for the whole of 2022.

More specifically, the report indicates that demand for OPEC crude in 2021 was revised down by 0.2 mb/d from the previous month assessment to stand at 27.4 mb/d, around 4.7 mb/d higher than in 2020. Also, demand for OPEC crude in 2022 was revised down by 1.1 mb/d from the previous month’s assessment to stand at 27.6 mb/d, around 0.2 mb/d higher than in 2021.

Outlook of the global economy shows one that is projected to still gain traction, the report notes. This forecast is likely to be supported by massive stimulus packages. In addition, the ongoing vaccination programmes and improved treatment is expected to control the COVID-19 pandemic. This would further result in a recovery of economic activity and a steady rise in oil demand.

Oil supply forecast for 2021

On the supply-side, non-OPEC liquids supply growth forecasts in 2021 and 2022 have been revised up by 0.27 mb/d and 0.84 mb/d, respectively. The underlying basis for this forecast include the incorporation of the latest production adjustment decision of the non-OPEC countries participating in the Declaration of Cooperation (DoC).

The report indicates that US and Canadian liquids supply is subject to revisions in August 2021 forecast. Participating non-OPEC liquids are now expected to grow by 1.1 mb/d in 2021 to average 64.0 mb/d.

Following this, the main drivers for 2021 supply growth are anticipated to be Canada, Russia, China, the US, Norway and Brazil, with the US now expected to experience a year-on-year growth of 0.12 mb/d.

For 2022, liquids supply is expected to grow by 2.9 mb/d following new incremental production adjustments by the DoC’s non-OPEC members led by Russia with 1.0 mb/d. The US, with year-on-year growth of 0.8 mb/d, together with Brazil, Norway, Canada and Guyana, will be the other key drivers, the report notes.

Oil prices have generally fared well throughout the year. This has been supported by much improved economic conditions, with firm equity markets and large economic stimulus packages, the report highlights.

Furthermore, market confidence has also improved as OPEC and participating non-OPEC countries in the DoC maintained strong conformity levels in their voluntary production adjustments.

This notwithstanding, the most current resurgence of new COVID-19 variant (Delta variant) in several economies across the globe has impacted oil prices in recent days, the report cautions.