OPEC Begins Production Cut Back Implementation, Reviews Forecast

The Organisation of Petroleum Exporting Countries (OPEC), has  reduced its forecasts for global oil demand again as the group implements production cutbacks aimed at keeping markets in balance.

Due to a weaker economic backdrop and China’s strict anti-Covid measures, the OPEC lowered estimates for the amount of crude it will need to pump this quarter by 520,000 bpd, following a similar-sized downgrade a month ago.

This means the supply cut of 2 MMbpd agreed by the group and its allies last month – drawing fierce criticism from US President Joe Biden – should bring output down to levels that balance markets, even if the reductions are not fully implemented, the report indicated.

“The significant uncertainty regarding the global economy, accompanied by fears of a global recession, contribute to the downside risk for lowering global oil demand growth,” OPEC’s Vienna-based research department said in its monthly report.