World crude oil consumption will decrease: OPEC cuts global crude demand forecast due to rising inflation amid Russia-Ukraine war

The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday cut its forecast for global crude consumption this year. The organization has attributed this to rising inflation in the midst of the Russo-Ukraine war. OPEC has said in its monthly report that during 2022, there will be a demand for 36.7 million barrels of crude oil in the world every day. This is 4.80 lakh barrels less than the organization’s previous estimate.

Russia’s attack on Ukraine reduced demand

In fact, Russia attacked Ukraine in February. After this, the price of crude oil in the international market increased to $ 139 per barrel. Crude oil has never reached this level since 2008. After this, oil prices came down when the US and other countries announced that they would launch oil from strategic reserves. Still, crude oil remained above $100 per barrel.

However, OPEC has said in its report, ‘Although we estimate that both Russia and Ukraine will be in recession this year, but its impact will not be limited to these countries only.

OPEC is an organization of crude oil producing countries. It currently has 13 member states including Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Congo, Saudi Arabia, the United Arab Emirates and Venezuela.

In 1960, oil producing countries Iran, Iraq, Kuwait, Saudi Arabia and Venezuela together formed OPEC. Its headquarter is in Vienna. Then gradually other oil producing countries also joined it.

How much dependence of India on OPEC countries?

India imports 80% of its crude oil to meet its requirement. Whereas, China imports 50% and South Korea, Japan import 100% of crude oil. Russia accounts for 12% of the world’s crude oil production, 12% in Saudi Arabia, and 16% to 18% in the US.

OPEC countries supply 60% of India’s crude oil requirement. These include Saudi Arabia, Iraq, Iran, Venezuela. All these countries are founding members of OPEC. Obviously, most of India’s oil needs are met from these countries.

However, these countries charge India 3-4 dollars more per barrel by charging an ‘Asian Premium’. Asian Premian ie Asian countries like Middle East countries sell oil to India, China, Japan, and other Asian countries at a higher price than other countries of the world.