LONDON — OPEC has cut its forecast for oil demand growth this year, citing a weaker-than-expected recovery in India and other Asian countries, and warned risks remain “elevated and skewed to the downside” for the first half of next year.

OPEC cuts 2020 oil demand forecast, trims 2021 outlook on pandemic fallout- oil and gas 360

Source: CNBC

In a closely-watched monthly report published Monday, the group of oil-producing nations downwardly revised its outlook for global oil demand to an average of 90.2 million barrels per day in 2020. That’s down 400,000 bpd from the previous month’s estimate and reflects a contraction of 9.5 million bpd year-on-year.

The report comes as energy market participants become increasingly concerned about a faltering economic recovery and stumbling fuel demand in the wake of the coronavirus pandemic.

The Middle East-dominated group, which consists of some of the world’s largest oil producers, said on Monday it had revised oil demand in OECD countries up by around 100,000 bpd due to less-than-expected declines in all sub-regions during the second quarter.

However, oil demand was revised down by 500,000 bpd in the non-OECD region due to weaker oil demand performance in Asia, particularly in India.

Looking ahead, OPEC said the negative impact on oil demand in Asia was expected to persist through the first six months of 2021.

“Additionally, risks remain elevated and skewed to the downside, particularly in relation to the development of Covid-19 infection cases and potential vaccines,” the group said in the report.

“Furthermore, the speed of recovery in economic activities and oil demand growth potential in Other Asian countries, including India, remain uncertain,” it added.

As such, OPEC now expects global oil demand to grow by 6.6 million bpd to an average of 96.9 million bpd next year. This updated forecast was also 400,000 bpd lower than its previous estimate.

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