Chinazor Megbolu |
The Secretary-General, Organisation of Petroleum Exporting Countries (OPEC), Dr. Sanusi Barkindo has projected 11 million barrel per day (bpd) oil demand decline by December, 2020.
In his address at the 46th virtual meeting of the Joint Technical Committee of the OPEC,Barkindo said that despite the rise in stability in the demand for crude oil by countries like; China and India, there will be a decrease in the demand for the product by about 11 million bpd by December this year.
Barkindo also noted that the market will likely bounce back by 6 million bpd by 2021, if the vaccines for COVID-19 pandemic become effective as expected.
He hinted that the OPEC supply cuts, which began in April, 2020 must be strictly followed towards ensuring the prices of crude oil is stabilised, adding such move will avoid a reversion to the devastating fall in prices in the first quarter of 2020.
Barkindo further buttressed that the threat of the Covid-19 pandemic was not over yet as some countries have returned to lockdowns towards curtailing the impact of the pandemic.
“The prospects for oil demand continue to remain weak. We expect demand this year to stay stagnant at about 90 mb/d, which represents a staggering decline of nearly 11 mb/d for the year compared to our January projection.
“For the coming year, demand should bounce back, growing by at least 6 mb/d. However, this latest forecast reflects a downward revision of around 400,000 b/d.
“I would add here that our overall projections are more or less in line with the International Energy Agency (IEA), whose latest market report alludes to the role of the DoC and its strong conformity levels in helping to stabilise the global market,” Barkindo said.
Furthermore, he explained that in India and China, oil demands are expected to bounce back by 2021 with an increase of 14 per cent in India and almost 9 per cent in China compared to 2020.
According to him; “that translates into combined growth of close to 1.7 mb/d for 2021”.
Barkindo, however, stated that the Covid-19 pandemic had continued to impact on the global oil market due to some uncertainties it created in the market.
“Today, there is a sense of déjà vu. As was the case earlier this year, health systems are again struggling to cope with rising patient numbers and policymakers are wrestling to contain the virus without causing further economic disruption.
“Here in Austria, as you might have heard, the government on Saturday announced stringent measures, the second lockdown this year, amid the resurgence of a stronger wave of COVID-19 that is straining the country’s health system,” Barkindo said.
He also said that the OPEC projects a decrease in global Gross Domestic Product (GDP) by more than 4 per cent in 2020.
Barkindo added that this is a stunning setback when compared to its January projection of +3.1 per cent for 2020.
According to Barkindo; “our projections reflect a cautious outlook for the coming year, with growth now expected at 4.4 per cent in 2021. The forecast for next year represents a healthy rebound but is nonetheless a downward revision from the 4.5 per cent we presented at last month’s meeting”.
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