Rystad: Oil demand will sink by 1.4 million barrels per day

Global oil demand will fall by 1.4 million barrels per day, according to Rystad Energy’s latest forecast on Friday, citing the National newspaper.

A loss of 1.4 million barrels per day would reduce oil demand to an average of 99.6 million barrels per day, down from 2019 levels of 100.2 million barrels per day. Risted said the rebound in that demand is not expected to be happy until next year at the earliest.

The drop in oil demand is likely to come from Russia’s invasion of Ukraine, rising inflation, coronavirus-inspired Chinese shutdowns, and supply chain disruptions. Further oil demand pressures could be exerted by future shutdowns or geopolitical issues.

“Demand has contracted as a direct result of the impact of lower economic activity globally,” the consultancy said, adding that such a drop in demand could ease the tightness of oil markets today and calm oil prices.

Rystad isn’t the only company cutting oil demand forecasts. OPEC cut its forecast for oil demand growth in 2022 by 480,000 barrels per day against the backdrop of lower expected global economic growth due to the war in Ukraine and the Chinese shutdowns due to the outbreak of the virus.

The International Energy Agency also cut its forecast for oil demand by 260,000 barrels per day to reflect the return of severe coronavirus lockdowns in China.

Meanwhile, the World Bank and the International Monetary Fund have lowered their forecasts for overall global growth for this year.

But Rystad is not changing its bullish oil price forecast. According to Rystad, if the Russian war in Ukraine continues, oil and gas prices will increase, especially if the European Union ends the oil and gas embargo this year.

“The worst case in the Russian war for oil demand is based on Brent crude prices reaching $180 a barrel in the last quarter, which further led to the economic slowdown and total destruction of oil demand,” Rystad said.

By Julian Geiger for Oilprice.com

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