New OPEC chief expects oil demand growth to slow in 2023

The new secretary general of global oil-producing alliance OPEC told Reuters he expects oil demand growth to slow in 2023.

“It all depends on how things unfold,” Haitham al-Ghais, who took on the new role on Aug. 1, told the outlet. 

“But we are still optimistic, as I said,” he continued. “We do see a slowdown in 2023 in demand growth, but it should not be worse than what we’ve had historically.”

The week al-Ghais assumed the role, OPEC and its allies agreed to increase oil production in September by 100,000 barrels a day, a far slower pace than its 648,000 barrels per day increases in July and August.

The new secretary didn’t indicate what OPEC would decide at its next meeting scheduled for Sept. 5.

“I want to be very clear about it — we could cut production if necessary, we could add production if necessary,” he told Reuters.

Brent crude prices clocked in just below $97 per barrel as of Thursday afternoon, a slight increase from earlier this week when prices fell to roughly $92 per barrel. The recent dip marked the lowest price level since before Russia invaded Ukraine in February, which sent prices skyrocketing to more than $120 per barrel.

“There is a lot of fear,” al-Ghais told Reuters, adding that he still feels bullish on oil demand.

“There is a lot of speculation and anxiety, and that’s what’s predominantly driving the drop in prices,” al-Ghais said.

He told Reuters he expected increases in jet fuel needs to sustain oil demand as people travel more.

In the United States, commercial air travel has surged this summer to levels not seen since before the pandemic, with the Transportation Security Agency reporting more than 2 million people passing through the nation’s airports on an average day.

Al-Ghais added that he believed concerns over a sluggish Chinese economy were exaggerated.

China’s central bank on Monday slashed a key interest rate and injected capital into lending markets after recent economic indicators showed slow growth, driven by the country’s “zero tolerance” COVID-19 policy that has at times stymied manufacturing and other sectors of the Chinese economy. 

Factory output and retail sales in China both weakened in July, while home sales dropped by double digits.

“Yes, I am relatively optimistic,” al-Ghais told Reuters of his outlook for next year. “I think the world is dealing with the economic pressures of inflation in a very good way.”