OPEC stuck to its prediction of a strong recovery in world oil demand in 2021 as growth in China and the United States counters the coronavirus crisis in India, an outlook that bolsters the group's plan to gradually ease output cuts.
In a monthly report, the Organization of the Petroleum Exporting Countries said demand will rise by 5.95 million barrels per day (bpd) this year, or 6.6%. The forecast was unchanged from last month.
The report's optimism comes even as it warns of "significant uncertainties," mainly around the pandemic, and as concern about India weighs on oil prices. Crude LCOc1 fell after the report was released but is still up 30% this year at near $68 a barrel.
"India is currently facing severe COVID-19-related challenges and will therefore face a negative impact on its recovery in the second quarter, but it is expected to continue improving its momentum again in the second half of 2021," OPEC said in its monthly report.
India's seven-day average of new COVID cases hit a record high. Oil refiners in the country - the third-largest consumer - are reducing crude processing rates.
In the report, OPEC cut its oil demand forecast for the second quarter by 300,000 bpd, and raised its estimate for the third quarter by 150,000 bpd and by 290,000 bpd for the last three months of 2021.
OPEC now sees 2021 world economic growth at 5.5%, up from 5.4% last month, assuming the impact of the pandemic will have been "largely contained" by the beginning of the second half.
"The recovery is very much leaning towards the second half," OPEC said.