The Organization of the Petroleum Exporting Countries (OPEC) said in its World Oil Outlook that global crude oil demand would increase sharply in 2021 and surpass pre-pandemic levels in 2022 driven by the post-pandemic economic recovery. According to the group, demand would continue rising sharply by 1.7 million bpd to 101.6 million bpd in 2023 despite an ongoing energy transition.
With a bright demand outlook, OPEC and its allies are gradually unwinding their record supply cuts made in 2020. However, there are signs of OPEC+ producers unable to ramp up output due partially to a lack of investment. Last year, upstream oil capital spending plunged by almost 30% to about $240 billion as producers responded to weak demand due to the pandemic.
However, underinvestment has emerged as a major challenge for producers to keep up with the rising demand. OPEC Secretary-General Mohammad Barkindo warned that a supply-demand imbalance could result in price volatility.
For the long term, OPEC forecast global oil consumption to hit 106.6 million bpd in 2030, down 600,000 bpd from the group’s forecast last year and 11 million bpd lower than its view in 2007. It also trimmed its 2045 demand forecast to 108.2 million bpd, down 900,000 bpd from its projection in 2020. OPEC said the slowdown would be the result of tele/home-working and the shift to electric mobility.
