RIYADH: Opec+, the producer supergroup headed by Saudi Arabia and Russia, will meet amid a severe health crisis in India, the world’s third largest oil consumer, which is likely to dent demand.
Oil demand growth is expected to be around 6 million barrels per day, the technical committee of the group said on Monday. The forecast is 400,000 bpd higher than previously estimated, report agencies.“The Opec+ joint technical committee (JTC) maintained their guidance on oil demand overnight, although they noted the downside risks to it due to Covid-19 and India in particular,” said Jeffrey Halley, senior market analyst, Asia Pacific at Oanda.
Oil prices dipped following the committee’s assessment but the Brent and West Texas Intermediate (WTI) benchmarks were up ahead of today’s meeting.
Brent, the international benchmark, under which two-third’s of oil is traded, was up 0.56 per cent at $66.02 per barrel at 9.09am UAE time. WTI, which tracks US grades, was up 0.58 per cent at $62.27 per barrel.
Opec+ will convene its joint ministerial monitoring committee at 2pm Vienna time today. The ministerial meeting of the group is planned for Wednesday.
The group’s plan to incrementally add a total output of 2 million bpd by July is likely to remain unchanged despite a growing surge of Covid-19 infections in India.
The country of 1.37 billion people is in the grips of a devastating second wave of Covid-19, with 319,435 new cases and 2,764 deaths on Monday, according to Worldometer, which tracks the pandemic. India has registered over 1 million infections in the past four days.The country’s fragile health infrastructure has buckled under the volume of new cases and the daily infection rate could rise to 440,000 by May 8, scientists from the Indian Institute of Technology in Kanpur and Hyderabad said on Tuesday. The surge in cases could lead to nation-wide lockdowns that would crimp energy demand and derail an economic recovery. India’s economy was set to expand 12.5 per cent this year following an 8 per cent contraction in 2020, according to the International Monetary Fund.
A continuing surge of cases from India well into the summer could undo the plan by Opec+ producers to continue to add supply to the markets. The group plans to increase output by 350,000 bpd in May and June and will add 450,000 bpd in July.