On Tuesday, March 14th, the Organization of the Petroleum Exporting Countries (OPEC) announced its updated forecast for China’s oil demand growth in 2023, following the country’s decision to ease COVID-19 restrictions. OPEC raised its expectation for China’s demand to grow by 710,000 barrels per day (bpd), up from last month’s forecast of 590,000 bpd.
While this increase in demand could boost the oil markets, crude oil prices have dropped this week due to concerns about a new financial crisis, following the collapse of Silicon Valley Bank (SVB). OPEC has also pointed to the potential downside risks to global economic growth, including rising interest rates.
Despite these risks, OPEC maintains its expected level of global demand, with a forecast of a 2.3% increase or 2.32 million bpd in 2023, unchanged from the February forecast. However, the lower demand forecasts in other countries offset the surge in Chinese demand.
The opening of China’s economy and the cancellation of the Zero Covid policy has resulted in the increased demand for oil. OPEC’s report highlights the importance of monitoring the global economic situation and potential risks, even as demand for oil continues to grow.