Alex Lawler

LONDON (Reuters – OPEC cut Tuesday its projection for world oil demand growth in 2022. The reasons were Russia’s invasion in Ukraine, increasing inflation due to rising crude prices and the reemergence of Omicron coronavirus type in China.

According to an Organization of the Petroleum Exporting Countries’ (OPEC), the Organization of the Petroleum Exporting Countries forecasted that the world would demand 3.67 million barrels of oil per day (bpd), which is 480,000 fewer than its previous forecast.

Russia invaded Ukraine in February, sending oil prices to $139 per barrel. This is the highest level since 2008. It also worsened inflationary pressures.

The price of crude oil has fallen since the United States, along with other countries, announced plans to increase supply by tapping strategic oil stocks. However it is still above $100

According to OPEC, “While Russia’s and Ukraine’s recessions are forecasted for 2022,” the report stated.

Global inflation is fueled by the strong increase in commodity prices, ongoing supply-chain bottlenecks, and logistical logjams related to COVID-19 in China and other countries.

Nevertheless, global oil consumption is expected to exceed the 100 million bpd threshold in the third trimester, just as OPEC predicted.

According to OPEC in 2019, the world used over 100 million barrels per day of oil.

OPEC+ is a group of OPEC members and their allies, which includes Russia. It has been reversing records in output reductions that were put in place in 2020.

OPEC+ opted to ignore the Ukraine crisis during its latest meeting. Instead, it abided to a previously agreed plan for boosting its monthly output goal by 432,000 bpd (May)

A number of OPEC members have underinvested in oilfields, partly as a result the pandemic. The group hasn’t been able deliver its promise to increase output.

OPEC reported that March’s OPEC output rose only 57,000 bpd at 28.56million bpd. This was in contrast to the 253,000 bpd increase allowed by the OPEC+ agreement.