OPEC downgrades oil demand growth outlook for 2018 and 2019

Daniel Fowler
October 13, 2018

Brent oil futures with delivery in December 2018 lost 1.95% down to $81.47 per barrel on the London-based ICE after the OPEC report release.

Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, taking a major hit from US sanctions and throwing a challenge to other OPEC oil producers as they seek to cover the shortfall.

That's down from at least 2.5 million bpd in April, before President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions.

Figures released Thursday by the U.S. Energy Information Administration revealed crude inventories climbed by six million barrels in the week leading up to October 5, compared with analyst expectations for an increase of 2.6 million barrels. Total oil demand for the year is now pegged at 98.79 mb/d.

OPEC on Thursday lowered its estimate for the global oil demand next year due to the slower economic growth and USA shale output growth.

The OPEC's report also put Iran's oil output based on direct communication at 3.755 million bpd, down 51,000 bpd compared to August. "The market remains well supplied".

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BP is reportedly planning on a cycle of oil prices at $60 to $65 per barrel: "We've been through this period of really low prices and they're up again and we can't plan on these high prices right now", Dudley explained.

This survey signified that the OPEC (Organization of the Petroleum Exporting Countries) producers increased crude outcome in last month that eased global supply concerns. Production hikes by Saudi Arabia and Libya offset a sharp output decline in Iran, according to independent figures from several sources.

"Upcoming US sanctions against Iran already caused the country's output to drop by 350 thousand barrels per day (mbpd) in September", according to Fitch.

Oil prices gave back early gains and turned lower on Friday after the International Energy Agency (IEA) deemed supply adequate and the outlook for demand weakening, sinking even as equities rebounded from a slump Thursday. The fears are growing that the US demands for an Iran oil embargo could cause a significant supply shortfall.

In a written reply to a question in the lower house of the parliament (Lok Sabha), Pradhan has said that Saudi Arabia supplied 30.9 MT of crude oil in the first 10 months of the current fiscal year. "In 2019, world oil demand growth is forecast at 1.36 mb/d, down by around 50 tb/d from last month's projections, mainly reflecting adjustments in the economic projections for Turkey, Brazil and Argentina", the report read.

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