Vienna May 12 2022: Sanctions on Russia after its invasion of Ukraine will give OPEC more room to expand its market share in 2022, according to the group’s monthly oil market report.
OPEC’s analysts lowered their global oil demand outlook for 2022 by 210,000 b/d to 100.29 million b/d, the organization said May 12 in its closely-watched release.
But even with the demand drop, the forecast decline in Russian liquids production lifted the call on OPEC crude to 29.05 million b/d for the year, up from 28.96 million b/d in its previous forecast. Russia’s estimated liquids production for 2022 was lowered by 360,000 b/d.
Actual production by OPEC in April was 28.65 million b/d, based on secondary source estimates, the group said.
OPEC and several allies, including Russia, have been increasing their output as global economic activity recovers from the pandemic.
As OPEC cut its demand forecast for the year, it noted that demand growth will slow to 2.8 million b/d in the second quarter from 5.2 million b/d in the first quarter.
The organization lowered its global economic growth forecast for 2022 to 3.5% from 3.9%, with Russia seen in contraction and growth estimates lowered from last month for the US, the euro-zone, Japan, China, India, and Brazil.
“Challenges related to ongoing geopolitical tensions, the continued pandemic, rising inflation, aggravated supply chain issues, high sovereign debt levels in many regions and expected monetary tightening by central banks in the US, the UK, Japan and the euro area require close monitoring,” OPEC said.
On the supply side, non-OPEC countries were expected to produce 65.97 million b/d in 2022, a year-on-year rise of 2.4 million b/d compared with 2.7 million b/d forecast last month. The main drivers of supply growth were expected to be in the US, Canada, Brazil, Kazakhstan, Guyana and Norway, it said.
Breaking down the call on OPEC, the estimated need for the group’s crude is expected to rise to 30.05 million b/d by Q4 from 28.01 million b/d in Q2. OECD oil inventories stood at 2.621 billion barrels at the end of March, or 304 million barrels below the latest five-year average, according to OPEC.
The OPEC+ alliance, which collectively controls about half of global crude production capacity, is scheduled to meet online June 2 to assess market conditions and review plans to bring more output online.
Saudi Arabia, the world’s largest exporter of crude, said it pumped 10.441 million b/d in April, up by 141,000 b/d from March, according to the report.
