Weak global activity will limit growth in oil demand

Significance

Over the last year, the organisation, in tune with the wider OPEC+ group, has made two pre-emptive cuts to production targets to support oil prices as the economic outlook weakened.

Impacts

• Further output restrictions would increase oil prices at least in the short term, slowing the forecast gradual decline in inflation.
• If economic prospects deteriorate, the market could take further OPEC cuts in its stride, with oil prices continuing to weaken modestly.
• OPEC taking on the majority of any new cuts and non-compliance by Russia would boost the latter’s revenue base as it wages war in Ukraine.