Brent, the global benchmark for crude oil, rose marginally in price on Thursday, as the Organisation of Petroleum Exporting Countries projected that the demand growth for oil would continue this year.
Industry figures showed that Brent moved up by $0.77 or 0.72 per cent to $107.57/barrel at about 7.13pm Nigerian time. It had traded around 106.8/barrel the preceding day.
In its statement to the International Monetary and Financial Committee meeting of ministers and governors for April 2022 and released on Thursday, OPEC stated that oil prices had been on the rise, particularly in March this year.
It said the ICE Brent benchmark had averaged near $98/barrel in the first quarter 2022, about $18 higher than its value in the fourth quarter 2021, as this was mainly due to the escalating geopolitical tensions in Eastern Europe and the concerns that this might result in large oil supply shortages, amid trade dislocations.
The organisation said, “World oil demand is estimated to have recovered significantly in 2021, rising by 5.7 million barrels/day. In absolute terms, world oil demand is estimated to have reached 96.8 mb/d last year.
“In 2022, world oil demand growth is expected to continue recovering and to increase by around 3.7 mb/d to average 100.5 mb/d.”
OPEC stated that additionally, improvements in vaccination rates and a potential increase in public confidence in managing COVID-19 were anticipated to be more widespread in 2022, further supporting the recovery of oil demand, particularly transportation fuels.
“Petrochemicals and transportation will be sectors of the economy that will require more oil in 2022. Gasoline demand is forecast to be supported by rising vehicle sales while expansion in the petrochemical industry and steady petrochemical margins will support light distillates in 2022,” it stated.
The group stated that estimates showed global exploration and production capital expenditures spending for 2021 rose by a slight 5.1 per cent year-on-year to average $413bn, much lower than the $885bn recorded in 2014.
It further stated that global oil market fundamentals strengthened in fourth quarter 2021 and first quarter 2022 on the back of sustained global economic and oil demand growth.
The organisation said this was also due to the ongoing efforts by OPEC and non-OPEC producers participating in the Declaration of Cooperation to support market stability.
It said, “Oil market conditions showed further improvement since the last IMFC in October 2021, despite the outbreak of new COVID-19 strains, including Omicron.
“However, more recent developments related to the geopolitical developments witnessed in Eastern Europe, along with the COVID-19 pandemic, particularly in China, raised uncertainty regarding the global economic outlook.”