The Omicron COVID variant has already had an impact on global oil demand, but Omicron’s impact is expected to be mild and short-lived, OPEC said in its December Monthly Oil Market Report.
OPEC is therefore leaving its 2021 and 2022 demand growth forecasts unchanged. The oil cartel went further suggesting that the recent fears of Omicron’s deleterious effect on oil demand may be unfounded. OPEC instead expects that the Omicron variant will be mild and short-lived, because the world is expected to improve on how it handles COVID-19 and any related challenges.
The organization did make a downwards adjustment to its demand forecast for the fourth quarter 2021, mostly to account for COVID-19 containment measures in Europe and the potential fallout which might occur from the Omicron variant.
However, OPEC kept its full-year demand growth estimate unchanged from last month’s assessment, at a growth of 5.7 million barrels per day (bpd) in 2021 compared to 2020.
For 2022, the outlook is also unchanged from last month’s assessment, with growth still expected at 4.2 million bpd compared to this year. OPEC has pushed some of the recovery it was banking on for the fourth quarter into the first quarter of 2022, after which OPEC sees a steady recovery throughout the second half of 2022.
The OPEC+ group indicated last week that it had fair confidence in oil demand when it kept its production plans unchanged earlier this month, which calls for an additional 400,000 barrels of oil from the group starting in January.
