OPEC Sees Brexit Risk to Oil Demand, Slide in Non-OPEC Supply
OPEC said the U.K.’s vote to leave the European Union could curb global economic growth next year, notably in Europe, where the risk is that demand for oil could fall.
European oil demand “faces substantial downside risks…as a result of uncertainties related to the region’s economy, resulting from the U.K. referendum, among other challenges,” OPEC’s Vienna-based research department said in its monthly report released Tuesday. Economic growth and demand for crude oil are closely tied.
The Organization of the Petroleum Exporting Countries downgraded its global growth forecast for this year to 3% from 3.1%. Meanwhile growth in the eurozone could slow to 1.2% in 2017 from 1.5% this year, OPEC said.
It forecast new oil demand of 1.2 million barrels a day next year, about 300,000 barrels a day above the average of the past 10 years.
European demand represents around 14.5% of global oil demand. It is expected to reach 13.74 million barrels a day this year, roughly unchanged from 13.71 million barrels a day in 2015.
On the supply front, production from countries outside the group, which controls more than a third of the world’s oil supply, is expected to fall by 880,000 barrels a day this year, to 56.03 million barrels, compared with 2015.
The forecast represents a downward revision of 140,000 barrels a day mainly because of lower output in Canada and the U.S.
U.S. crude futures rose 4.6% to $46.80 a barrel in New York. Brent crude gained 4.8% to $48.47 a barrel.
