BAKU, Azerbaijan, October 11. The Correlation between oil consumption and global GDP growth is expected to weaken, Trend reports with reference to Fitch Ratings.
“A correlation between global GDP growth and oil consumption remains strong, although we expect it to weaken in the medium to long term due to the energy transition and diminishing role of oil in the energy mix,” reads the report published by Fitch Ratings.
The report says that oil demand has been recently boosted by switching from gas to oil in energy generation, driven by soaring natural gas prices, particularly in Europe and the Middle East.
“However, demand growth is fairly weak in other sectors. The International Energy Agency (IEA) expects 4Q22 demand to be in line with 4Q21 levels. We now expect global GDP to grow 2.4% in 2022 (down by 0.5% on our previous estimates), and 1.7% in 2023 (down by 1%). This means that cumulative oil demand growth will fall by about 750kbpd in 2022-2023 compared to our previous assumptions,” said the rating agency.
Fitch analysts note that oil inventories significantly decreased throughout 2021 due to a market deficit caused by OPEC+’s cautious stance and improving demand. Global oil inventories moderately increased in 2Q-3Q, suggesting that the market has been in a modest surplus.
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