OPEC increased its projection for China's oil demand growth in 2023 due to the country's COVID-19 restrictions being relaxed.
OPEC forecast that global demand will rise by 2.32 million barrels per day (bpd) in 2023, equal to a 2.3% increase.
The bullish news was overshadowed by the collapse of Silicon Valley Bank, leading investors to fear another financial crisis may be on the horizon.
Oil prices fell after the report's release, with Brent falling below $80 per barrel.
OPEC noted in the report that "China's reopening, following the lifting of the strict zero-COVID-19 policy, will add considerable momentum to global economic growth," adding "The rapid rises in interest rates and global debt levels could cause significant negative spill-over effects, and may negatively impact the global growth dynamic"
China is contributing greatly to overall crude demand growth, with an estimated 710,000 bpd expected in 2023, compared to 590,000 last month - though there will be some contraction in 2022 too. Lower estimates in Europe and the US mean that the total remains unchanged despite these improvements from China.
OPEC pointed out that an inflation slowdown managed well by US Federal Reserve could have some positive effects but emphasized caution when viewing economic perspectives.
Crude production rose by 117,000 bpd in February to 28.92 million bpd as Nigeria recovered following improved security measures implemented in its oil-producing Delta region, though some members are still having difficulty meeting their targets set by OPEC+.
Oil demand estimated by OPEC in 2023 has been revised down by 200,000 now at 29.3 million bpd due largely to this higher output than earlier predicted. Furthermore, cuts agreed upon by OPEC+ have not helped bring about any decrease or reversal of oil prices as yet.
By Michael Kern for Oilprice.com
More Top Reads From Oilprice.com:
Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com, More