VIENNA: Global oil demand will be lower than expected this year and next year, according to the Organization of the Petroleum Exporting Countries (Opec).
The global economy is under pressure due to high inflation, increasing interest rates and ongoing supply chain issues, Opec reported in Vienna.
For the fourth quarter of the year, Opec lowered its demand projection by almost 800,000 barrels (159 litres each) to 101.6 million barrels per day. Next year, Opec forecasts an average demand of 102 million barrels per day, 700,000 less than previously estimated.
The broader production alliance Opec+, in which the organisation allies with other countries such as Russia, decided last week to slash its agreed-upon output by a total of 2 million barrels starting in November. According to analysts, the reduction will actually only amount to around 1 million barrels, as Opec+ has recently pumped less oil than planned.
RECESSION WARNING
The International Energy Agency on Thursday said the decision to slash output could push the global economy into recession.
"The relentless deterioration of the economy and higher prices sparked by an Opec+ plan to cut supply are slowing world oil demand," the Paris-based agency, which includes the United States and other top consumer countries, said.
"With unrelenting inflationary pressures and interest rate hikes taking their toll, higher oil prices may prove the tipping point for a global economy already on the brink of recession," it added in its monthly oil report.
The IEA too lowered its forecast for global oil demand growth next year by 470,000 barrels per day, the oil market report said, citing a "stronger economic headwind" which was also due to high inflation in many industrialised countries and steeply rising interest rates.
RUSSIAN OIL EXPORTS DIP
Russian Oil exports dropped by nearly 4% in September as sales to Europe fell sharply ahead of EU sanctions that kick in at the end of the year, the IEA said.
Russian Oil exports fell by 230,000 barrels per day (bpd) in September to 7.5 million bpd, the energy watchdog said in its monthly report.
Crude exports were down 260,000 bpd to 4.8 million bpd from a recent peak of 5.5 million bpd in April. Exports of products such as diesel and gasoline rose by 30,000 bpd.
Shipments to the European Union by 390,000 bpd to 2.6 million bpd. EU crude Oil imports fell to 1.6 million bpd.
The share of of European sales in Russia's total exports fell to 35% from 50% at the start of the year, the IEA said.
The EU will stop buying all Russian crude Oil delivered by sea - or 2/3 of all EU imports of Russian crude - from early December under sanctions imposed since the outbreak of the conflict in Ukraine, and will ban all Russian refined products two months later.
"While it has taken seven months for them to replace 800,000 bpd of Russian crude Oil imports, (the EU) will need to switch an additional 1.3 million bpd of seaborne and pipeline volumes in the two months remaining until the EU ban on kicks in," the IEA said.
Exports to India, which has ramped up purchases of discounted Russian crude following Moscow's invasion of Ukraine in February, remained stable at 1 million bpd in September.
Loadings to China, the largest importer of Russian crude Oil since June, were down by 115,000 bpd.
"However, with close to 500,000 bpd of Oil going to as yet unidentified destinations, final numbers for each importing region may result in significant revisions to these preliminary figures," the IEA said. -- dpa/Reuters
Oman Observer is now on the WhatsApp channel. Click here
