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Stability Amid Uncertainty: OPEC Forecasts Steady Oil Demand for 2023 Despite Economic Risks

In its latest report, OPEC maintained its global oil demand forecast for 2023, emphasizing the potential impact of Chinese growth and downside risks in other economies like the U.S. debt ceiling. The organization expects a 2.3% increase in world oil demand, virtually unchanged from the previous month’s forecast. OPEC noted minor adjustments due to China’s stronger-than-expected economic performance, while other regions may experience slight declines due to economic challenges. Despite recent oil output cuts by OPEC+ members, oil prices remain affected by interest rate hikes and concerns over the U.S. debt ceiling. OPEC’s report serves as a prelude to the upcoming OPEC+ policy meeting in June. Additionally, OPEC highlighted potential risks to economic growth, such as inflation and increased debt payments stemming from higher interest rates. As oil prices continue to fluctuate, OPEC’s April production saw a decline, reflecting both planned and unplanned reductions. The report also underscored non-OPEC supply growth expectations and highlighted factors that could limit supplies, including investment levels and the situation in Ukraine. While investment levels are expected to rise above pre-pandemic levels, they remain below the peak reached in 2014 as companies prioritize capital discipline.

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