Middle East

OPEC bullish on oil market recovery; virus variants pose risk

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A 3D-printed oil pump jack is seen in front of displayed OPEC logo in this illustration picture, April 14, 2020. REUTERS/Dado Ruvic

  • Global oil demand to grow by 6 mln bpd in 2021
  • Coronavirus variants pose risk to recovery
  • JTC expert meeting ends with no recommendation

LONDON/DUBAI, June 29 (Reuters) - Global oil demand will rebound strongly in the second half of 2021 with oil inventories shrinking, OPEC's chief and experts said on Tuesday while warning that coronavirus variants pose a risk to the recovery.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, meet on Thursday and sources and market watchers have said they expect the group to discuss a further gradual easing of existing oil production curbs from August. read more

OPEC watchers have said the group could boost output by more than 1 million barrels per day (bpd), a more modest 0.5 million bpd or even leave production levels unchanged.

OPEC+ sources said no unanimous decision or recommendation emerged from OPEC+ expert consultations on Tuesday.

OPEC+ will now hold the joint ministerial monitoring committee (JMMC) meeting on July 1, a day after it was previously planned, a letter seen by Reuters showed.

Demand in 2021 was expected to grow by 6 million bpd, with 5 million bpd of that in the second half, OPEC Secretary General Mohammad Barkindo told Tuesday's meeting of experts, known as the Joint Technical Committee.

"The current 'wild card' factor is the 'Delta variant' of the pandemic that is resulting in rising cases and renewed restrictions in many regions," he said in a speech, a copy of which was seen by Reuters.

Barkindo said oil demand growth in the second half would show "a significant increase, even if uncertainties and associated risks would be factored in", with preliminary May data showing inventories in OECD industrialised economies falling below the 2015-2019 level.

Bringing oil inventories in line with the five-year average is one of the main goals of OPEC+.

Barkindo also said soaring sovereign debt levels fuelled by fiscal and monetary stimulus programmes were a concern because they could contribute to rising inflation in the coming months.

Writing by Dmitry Zhdannikov Editing by Edmund Blair, David Goodman and David Gregorio

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