The organization, due to meet in the coming weeks to set production levels for the second half, said demand increased by less than 1 million barrels per day in the first quarter after cutting its assessment by more than 20%, Bloomberg reported.
The world economy is headed for its weakest growth in a decade, buffeted by a prolonged tariff battle between the US and China.
“Throughout the first half of this year, ongoing global trade tensions have escalated,” resulting in “weaker growth in global oil demand,” the organization’s Vienna-based secretariat said in its monthly report, according to Financial Tribune.
“The observed slowdown in the global economy in the first half will be further challenged in the second half.”
Oil prices slumped into a bear market last week, sinking below $60 per barrel in London for the first time since January, on concerns that faltering demand would lead to a crude surplus even as the Organization of Petroleum Exporting Countries and its allies keep supply in check. Prices surged 3% Thursday on suspected attacks on oil tankers in the Persian Gulf.
Although OPEC reduced demand estimates for the first quarter, it kept forecasts for 2019 as a whole mostly unchanged and projects that consumption growth will accelerate during the rest of the year. World demand will rise by 1.14 million bpd, or 1.2%, on average this year, down from an estimate of 1.21 million bpd in last month’s report.
As a result, the report signaled that if OPEC maintains production at current levels, then global markets should tighten significantly during the third quarter, by about 1.3 million bpd. Output from its 14 members fell by 236,000 bpd to 29.9 million bpd last month as the US tightened its squeeze on Iranian exports, it said.