Global economic growth is forecast to pick up towards the end of the second quarter of 2022 despite the prevailing uncertainty, according to OPEC’s monthly report issued on Tuesday.
“The first quarter of the year showed a weakening growth trend amid strongly rising commodity prices and a surging Omicron wave, both of which dampened the economic dynamic, particularly in the advanced economies and China,” the report said. “Nevertheless, economic momentum has been building, especially in the contact-intensive services sector, which includes travel and transportation, leisure and hospitality.”
The OPEC expected this renewed activity to lead into the summer holiday season of the northern hemisphere, supported by still-sufficient savings in advanced economies to be spent on pent-up demand.
However, it added, “once the summer holidays are over, it will remain to be seen to what extent inflation, i.e. rising cost of living, financial tightening and rising geopolitical uncertainty, dampen the growth dynamic towards the end of the year.”
The global oil demand is anticipated, according to the report, to average 101.8 mb/d in second half of this year, up from 98.7 mb/d on average seen in the first half. For the year, world oil demand is forecast to grow by 3.4 mb/d.
Improving mobility in major economies, as well as seasonal containment of the pandemic is projected to support gasoline and distillate demand.
The rapid containment of COVID-19 in China is expected to support a healthy rebound in economic momentum in the region, according to the report. However, the second half of the year remains highly uncertain due to geo-political developments in Eastern Europe. Nevertheless, oil demand is forecast at healthy levels in the second half of this year.
In order to meet this incremental demand, the countries participating in the Declaration of Cooperation (DoC) decided in their 29th Ministerial Meeting held on June 2 to advance the planned production adjustments of September 2022 in an ongoing endeavour to ensure market stability.