The impact of the Omicron COVID variant on global oil demand will be mild and short-lived, OPEC said on Monday, leaving its 2021 and 2022 demand growth forecasts unchanged.
In its closely-watched Monthly Oil Market Report (MOMR), the cartel suggested today that recent fears of Omicron slashing oil demand significantly may be unfounded.
“The impact of the new Omicron variant is expected to be mild and short-lived, as the world becomes better equipped to manage COVID-19 and its related challenges. This is in addition to a steady economic outlook in both the advanced and emerging economies,” OPEC said in its report.
The organization revised down slightly its demand forecast for this quarter, mostly to account for COVID-19 containment measures in Europe and the potential impact of the new Omicron COVID-19 variant. However, OPEC kept its full-year demand growth estimate unchanged from last month’s assessment of growth of 5.7 million barrels per day (bpd) in 2021 compared to 2020.
For 2022, the outlook is also unchanged, with growth still expected at 4.2 million bpd compared to this year, as in last month’s outlook.
“The underlying assumptions for the rest of the year and 2022 have not changed,” OPEC stressed in its report.
“Indeed, some of the recovery previously expected in 4Q21 is now shifted to 1Q22, followed by a more steady recovery throughout 2H22,” the cartel added.
Next year, global oil demand is set to rise thanks to “improved COVID-19 management and rising vaccination rates, enabling economic activity and mobility to return to pre-pandemic levels, supporting transportation fuels in particular,” according to OPEC.
The wider OPEC+ group signaled confidence in oil demand, as well as flexibility to immediately adjust production if needed, when it kept its production plans unchanged earlier this month, planning to add another 400,000 bpd on the market in January.
“The expected market balance continues to be determined by the evolution of the COVID19 pandemic, as a key factor of uncertainty, but the successful joint efforts of the DoC continue to closely monitor all developments in a timely and vigilant manner, to be able to react to rapidly changing market circumstances,” OPEC said in its report today.