Chinese oil demand is suddenly collapsing as Beijing extends zero-COVID policies, OPEC says
Zhang Yun/China News Service via Getty Images
- OPEC now sees China's demand for oil dropping by 60,000 barrels per day this year, after forecasting an increase of 120,000 only a month ago.
- The cartel cited the extension of zero-COVID policies in some areas of China, which is the world's top oil importer.
- OPEC also revised down its projections for global demand growth in 2022 and 2023.
OPEC made a sharp reversal its in forecast for Chinese oil demand while downgrading its projections for global demand in 2022 and 2023.
The cartel now sees China's demand for oil dropping by 60,000 barrels per day this year, after forecasting an increase of 120,000 bpd only a month ago. Beijing has shuttered several provinces to stem a rebound in COVID-19 outbreaks which has thus far dampened the country's appetite for crude.
The sudden, negative swing in its forecast for China, which is the world's top importer of crude, coincided with lower guidance worldwide.
OPEC cut its demand growth view for 2022 by 460,000 bpd to 2.64 million bpd and for 2023 by 360,000 bpd to 2.34 million bpd.
OPEC cited "the extension of China's zero-Covid-19 restrictions in some regions, economic challenges in OECD Europe, and inflationary pressures in other key economies" as reasons for the lower outlook this year.
Brent crude oil prices were down 1.85% at $92.55 a barrel, and West Texas Intermediate fell 2% to $87.51.
The new outlook comes a week after OPEC slashed its production quota by 2 million bpd, which drew stark criticism from the Biden administration and even a vow to re-evaluate US relations with Riyadh.
President Joe Biden has been critical of de facto OPEC leader Saudi Arabia in recent days, and his White House has accused OPEC of siding with Russia in response to the output cut.
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