OPEC expects oil demand growth to slow significantly next year

(Bloomberg) — OPEC expects the pace of oil demand growth to halve next year as inflation and conflict grip the global economy.

World oil consumption will expand by 1.8 million barrels a day, down from the 3.4 million a day anticipated this year, the group’s preliminary projections show, according to a delegate. The outlook will be reviewed by representatives from the group’s member states next week.

The Organization of Petroleum Exporting Countries and its allies surprised traders earlier this month by agreeing to speed up the return of production halted during the pandemic, assenting to US entreaties for more oil after months of refusal.

How quickly the few members still holding spare capacity restore their remaining offline barrels will be debated in the coming weeks and months. With most OPEC+ nations already pumping at their limit, idle reserves are confined to the Saudi Arabia, the United Arab Emirates, Iraq and Kuwait.

The world economy will pay a “hefty price” for the war in Ukraine encompassing weaker growth, stronger inflation and potentially long-lasting damage to supply chains, the OECD said last week.