OPEC Reduces Oil Demand Forecasts for 2022 Due to Ukraine War

OPEC reduced its global oil demand growth forecasts for 2022 today, citing the repercussions of Russia's war in Ukraine and rising inflation amid rising crude oil prices and the resurgence of the Omicron variant of the coronavirus in China. In its monthly report, the Organization of the Petroleum Exporting Countries (OPEC) stated that global demand is expected to rise by 3.67 million barrels per day in 2022, a decrease of 480,000 barrels per day from previous forecasts. The outbreak of war in Ukraine in February led to oil prices soaring above $139 per barrel, the highest level since 2008, exacerbating inflationary pressures. Several countries announced plans to utilize strategic oil reserves to boost supply, but oil prices remain above $100. The report noted, "The strong rise in commodity prices, coupled with ongoing supply chain disruptions since the outbreak of the COVID-19 pandemic, along with escalating lockdowns in China and elsewhere in the world, all of this exacerbates inflation." Nonetheless, global oil consumption is still expected to exceed 100 million barrels per day in the third quarter, as OPEC had previously forecast. OPEC also revised its forecast for Russian oil supplies downwards by 530,000 barrels per day to 11.23 million barrels.