The Organisation of Petroleum Exporting Countries has cut its forecast for global oil demand growth and warned of a risk of further reduction in production as international trade disputes continues to fester.
OPEC said in its monthly report published on Thursday that world oil demand would rise by 1.14 million barrels per day this year, 70,000 bpd less than previously expected.
“Throughout the first half of this year, ongoing global trade tensions have escalated,” OPEC said in the report.
It added that the potential for these disputes to affect global demand poses “significant downside risks”.
OPEC and its allies will meet in the coming weeks to decide whether to maintain supply curbs, with some having become alarmed by a steep slide in prices, Reuters reported on Thursday.
OPEC, Russia and other producers have since January 1 this year implemented a deal to cut output by 1.2 million bpd. They will meet on June 25 and June 26 or in early July to decide whether to extend the pact.
Despite the supply cut, oil has tumbled to $61 a barrel from April’s 2019 peak above $75, pressured by fears over the US-China trade dispute and an economic slowdown.
Vienna-based OPEC also said its output fell in May as US sanctions on Iran boosted the impact of the supply pact.
“Production by all 14 OPEC members dropped by 236,000 bpd to 29.88 million bpd,” OPEC said.
In addition to lowering its demand forecast, OPEC said that oil inventories in developed economies rose in April, suggesting a trend that could raise concern over the possible build-up of an oil glut.
OPEC said it faced a challenging second half of 2019, with demand-dampening trade disputes combining with expected robust non-OPEC supply growth to complicate the producer bloc’s oil market rebalancing efforts.
The group said it must weigh a potential slowdown in global economic activity against geopolitical supply risks.
“The upcoming OPEC and non-OPEC ministerial meetings will carefully consider these developments, in order to ensure continued market stability,” OPEC said in the report.