OPEC has raised its 2023 global oil demand growth forecast in its first upward revision for months, due to China's relaxation of COVID-19 restrictions.
Global oil demand will rise this year by 2.32 million barrels per day (bpd), or 2.3%, the Organization of the Petroleum Exporting Countries said on Tuesday in a monthly report.
The projection is 100,000 bpd higher than last month's forecast.
A tighter supply and demand balance could support oil prices that have held relatively steady since December and stand at a little less than $86 a barrel. OPEC had kept its 2023 demand growth forecast steady for the past two months after a series of downgrades as the economic outlook worsened.
"Key to oil demand growth in 2023 will be the return of China from its mandated mobility restrictions and the effect this will have on the country, the region and the world," OPEC said in the report, according to Reuters.
"Concern hovers around the depth and pace of the country's economic recovery and the consequent impact on oil demand."
OPEC expects Chinese demand to grow by 590,000 bpd in 2023, up from last month's forecast of 510,000 bpd. China's oil consumption dropped for the first time in years in 2022, held back by its COVID containment measures.
The OPEC report was upbeat on economic prospects, nudging up its 2023 global growth forecast to 2.6% from 2.5%, though it said that a relative slowdown remained evident and cited high inflation and expected further increases to interest rates.
Other upside factors are the likelihood that the US Federal Reserve will manage a soft landing for the US economy and further commodity price weakness, OPEC said, although various potentially negative factors persist.
