Oil producer group Opec on Thursday (May 11) raised its forecast for Chinese oil demand growth this year but left its global projection steady, citing potential downside risks such as the US debt ceiling.

World oil demand in 2023 will rise by 2.33 million barrels per day (bpd), or 2.3 per cent, the Organization of the Petroleum Exporting Countries said in a monthly report. This was virtually unchanged from 2.32 million bpd forecast last month.

“Minor upward adjustments were made due to the better-than-expected performance in China’s economy, while other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand,” Opec said in the report.

Opec, Russia and other allies – together known as Opec+ – surprised the oil market on Apr 2 with an announcement of new production target cuts, adding to curbs already in place.

Oil prices intially rallied, but have been pressured by further increases to interest rates and concerns over the US debt ceiling.

Chinese oil demand is now expected to rise by 800,000 bpd, Opec said, up from the 760,000 bpd forecast last month, adding to a recovery after strict Covid-19 containment measures were scrapped.

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The global demand growth figure was unchanged for a third straight month and Opec left its 2023 economic growth forecast at 2.6 per cent, citing potential downside risks such as persistent inflation and increasing debt payments from higher interest rates.

“As further debt-related challenges may arise, geopolitical uncertainties persist and inflation continues,” Opec said in its economic commentary.

“In addition, the US debt ceiling issue has so far not been resolved, a matter that could have economic consequences.” Reuters