The Organization of Petroleum Exporting Countries (OPEC) have recently pointed to a pending crude supply deficit, instead of a surplus created by low oil prices, as it said that the oil markets are likely to generate high global demand for crude, with an estimated increase of 1.15mb/d, in 2017, Reuters reported.
OPEC’s 2017 Market Outlook suggests the strategy is working as it expects oil supply outside the group to fall further, helping to boost demand for its own crude. In June, OPEC’s oil output already rose to its highest in recent history as Iran and the Gulf member states boosted their oil supply.
OPEC, however, cut its predictions in its first 2017 forecast for increased demand as Brexit campaign has signaled uncertainty to the world’s economy. In the wake of the UK’s referendum, the price per barrel decreased from an amount as high as $53 to $47.
In addition, “after the UK’s referendum to leave the EU, economic uncertainty has increased. Potential negative effects have led to a downward revision of global economic growth in 2016 to 3.0% from 3.1%,” OPEC’s report read.
Similarly, the International Monetary Fund has expected a slash in global demand following the UK’s decision to exit the EU, The Fiscal Times informed.