Angola’s Minister of Mineral Resources, Petroleum and Gas, H.E. Diamantino Azevedo, issued an optimistic, yet cautious oil market outlook on Thursday during his opening address to the 181st Meeting of the OPEC Conference, highlighting a forecast rebound in oil demand, the growing role of cross-border cooperation and industry-wide challenges that remain ahead.
Rising Hope and Optimism: On the back of vaccine rollouts and a resumption in economic activities, the global economy is set to grow by 5.5% in 2021, up from 3.4% negative growth in 2020. Correspondingly, oil demand is expected to increase by six million barrels per day in 2021, up from a 9.3-million barrel per day contraction in 2021. According to the most recent OPEC Monthly Oil Market Report, oil demand is projected to rebound strongly in the second half of the year, rivaling pre-pandemic levels in the fourth quarter.
Role of Cooperation: H.E. Minister Azevedo attributed an improved market outlook to the signing of OPEC’s Declaration of Cooperation last year, which saw the implementation of production adjustments to safeguard the price of oil and ensure market stability. The Angolan Minister also praised Saudi Arabia for its additional voluntary adjustments, which “reaffirmed our overall efforts to keep the market on the road to recovery” and “provided a window of opportunity for Participating Countries that needed extra time to make up for overproduction.”
Uncertainties Remain Ahead: While the global market outlook is steadily improving, several challenges lie ahead, including the ongoing pandemic and spread of the Delta variant; high levels of fiscal and monetary stimulus that have triggered high debt and inflation in emerging markets; and “exclusionary policy and investment actions” that restrict investment in production technology and human capacity. Finally, energy poverty continues to disproportionately affect African countries, with energy resources offering a catalyst to stimulate economic growth and fight the further spread of Coronavirus.
OPEC will hold its First Ministerial Roundtable for Energy, Climate and Sustainable Development for oil-producing countries on September 26. In preparation, the Organization will hold its 4th Technical Workshop and 19th Coordination Meeting on Climate Change next week.