The Organization of the Petroleum Exporting Countries (OPEC) has said that the outbreak of lethal coronavirus infection in China and its spread to other countries around the world, has led it to lower its global oil demand predictions for the year.
In its monthly report, OPEC noted that world oil demand is now expected to rise by 990,000 barrels per day (bpd) this year — roughly 19 percent less than previously forecast. The downward revision in oil demand forecasts, could bolster calls by the organization for its members to implement even more production cuts.
At its meeting in December 2019, OPEC and several non-OPEC members together now referred to as OPEC+, decided to cut supply by an additional 500,000 barrels per day from January 2020. However, despite OPEC+ members assiduously complying with the production cuts in January, oil prices have fallen to $55 per barrel since the start of the year.
In early February, a technical panel advising OPEC+ recommended an immediate additional output cut of 600,000 bpd. Discussions are still ongoing among OPEC+ members about this additional cut, with Russia reportedly voicing opposition to any further curbs in production. The oil cartel’s ability to manage the oil market is also being complicated by increased production in the United States and other non-OPEC member states, where output is now expected to grow at over twice the rate of world oil demand in 2020.