The Organization of the Petroleum Exporting Countries (OPEC), in its latest monthly report, cuts its 2021 global oil demand projection as coronavirus cases continue to rise. OPEC now expects global oil consumption to grow by 6.54 million bpd to 96.84 million bpd next year, 80,000 bpd lower than the cartel’s forecast in September. OPEC also forecast that demand for its crude would stand at 27.93 million bpd next year, 200,000 bpd below its previous projection.
A further demand deterioration can pose a threat to OPEC+ plans to relax its coordinated supply cuts next year. The alliance agreed to cut production by 9.7 million bpd starting in May to prevent a total collapse in oil prices due to the pandemic. It has tapered the curbs to 7.7 million bpd since August and plans to relax the reduction further by 2 million bpd in January.
In the report, OPEC said its production decreased by 50,000 bpd to 24.11 million bpd last month. OPEC producers registered 104% compliance with the supply cut pact, up from August’s 103%. If OPEC’s projection realised, the group would have room to increase output next year by 3.8 million bpd from September’s production level without creating a glut.
