Global appetite for oil will remain subdued in the first quarter of 2021 due to coronavirus lockdown measures and rising infection rates, the Organization of the Petroleum Exporting Countries said Thursday.
In its monthly report, OPEC maintained its forecast that world oil demand in 2021 won’t recover to the levels seen before the pandemic. Global demand took a 10% hit last year and the cartel expects it to rebound to 95.9 million barrels a day this year, but remain 4% below 2019 levels.
Despite the beginning of vaccination programs in recent weeks, rising infection rates in wealthy Western nations are continuing to stymie an economic recovery, OPEC said. In Europe, government restrictions are forecast to significantly hurt growth again in the first quarter of 2021, it added.
While the economic impact of the virus is continuing in richer Organization for Economic Cooperation and Development countries, demand in large non-OECD nations such as China and India has recovered strongly. OPEC expects demand in non-OECD countries to increase by 3.3 million barrels a day in 2021.
Oil prices and equities have risen sharply in recent weeks, buoyed by vaccinations and Saudi Arabia’s announcement last week that it would unilaterally cut an additional one million barrels of daily oil production next month on top of the reductions already agreed on between OPEC and its allies.