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According to its Monthly Oil Report, the Organization of the Petroleum Exporting Countries (OPEC) fears that there will be a considerable downfall within the demand and supply of oil in the global market. The report said that OPEC is likely to cut down the oil demand by 0.4 barrel per day to 90.2 million per day.
The reason in the background for this decision is due to the low demand within the region of Asia, and in particular in India where there has been a huge increase in the Covid-19 cases averaging up to 100,000 approximately on daily basis.
While on the other hand, Israel has also decided to promulgate another lockdown in an attempt to contain the spread of the Covid-19 virus which is otherwise increasing quite rapidly. It is expected that following in the footsteps of Israel, if other countries have also decided to impose further lockdowns then there is imminent danger to the prices of oil globally. The reports suggest that New Zealand which had remained unaffected for 102 days from the Covid-19 pandemic, has started to see a new outbreak in Covid-19 cases and consequently has decided to impose further lockdowns in an effort to control the Covid-19 cases.
There are various other countries that are also yet to decide whether they want to impose another lockdown or not. Looking at the present conditions within the global oil market, the fears of OPEC cannot be ignored and therefore estimated that the international oil demand will be able to maintain an average of 96.9 million barrels per day in the coming year 2021.
The overall impact drawn from the oil forecast published by OPEC could be that while the oil demand will remain under pressure but on the other hand the supply will get a big boost. However, OPEC has further informed that there are chances that the oil market will witness problems such as excessive inventories. It is expected that the countries forming part of OPEC are going to keep production for many months in order to improve the balance between the supply and demand of the oil.
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