Global oil demand growth must accelerate in the coming months to absorb the planned increase in oil supply by OPEC+ starting in October. The current economic slowdown and uncertainties, especially in the U.S. and China, pose significant risks to this demand growth and could lead to postponed supply increases or lower oil prices
Global oil demand growth needs to pick up pace in the coming months to accommodate an increase in oil supply that OPEC+ plans to implement from October, analysts and industry sources warn. Oil demand growth from top consumers, including the U.S. and China, has already fallen short of expectations, even before renewed fears of a U.S. recession triggered a global market sell-off this week.
If the economy continues to slow, oil demand growth will likely drop further. This scenario would force OPEC+ to either delay their supply increase plans or accept lower prices, according to industry experts. Gary Ross, CEO of Black Gold Investors, suggested that OPEC+ is unlikely to proceed with the planned October increase under current recession risks.
The price of oil dipped below $80 per barrel in August – a level lower than what most OPEC+ members require to balance their budgets. Independent analyst Neil Atkinson highlighted the downside risk to oil demand, particularly amidst concerns over the U.S. and Chinese economies. He expects OPEC+ to halt their planned output increases.
SOURCE: devdiscourse.com
(With inputs from agencies)