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World economy to grow 5.1% in 2021 OPEC says

posted onMarch 12, 2021
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The Organization of the Petroleum Exporting Countries (OPEC) expects the world economy to grow 5.1% in 2021, revising up its previous estimate (4.8%), according to the cartel's closely-scrutinized monthly market report released on Thursday (March 11).

The Vienna-based organization cited the U.S.’s latest $1.9 trillion fiscal stimulus bill and “the continuing recovery in Asian economies” in its move. Nevertheless, OPEC warned that "this forecast remains surrounded by uncertainties.” 

According to the report, the United States could see a climb of 4.8% this year, the Eurozone's growth expectations were raised to 4.3%, while China's economy could advance 8% in 2021. Japan's GDP is set to go up by 3.1% this year, analysts expect the Brazilian economy to rise 3%, while India could see the sharpest jump among major world economies as OPEC said it may surge 9% in 2021. 

The cartel also pointed to the uncertainty facing the oil market in the coming months, decreasing its global demand estimate for the first half of the year due to ongoing coronavirus restrictions but increasing its demand forecast for the second half of the year as “economic activity is expected to accelerate as the impact of the pandemic is expected to taper off.”  

On March 4, OPEC and its allies decided to relax cuts by 150,000 barrels a day.  The market was expecting quite a different outcome from the meeting and the decision not to increase production quickly sent crude oil prices higher. 

OPEC and its allies (OPEC+) should keep its "powder dry," Saudi Energy Minister Prince Abdulaziz bin Salman claimed after the meeting, adding that the world oil market improved from January.  

Russia's Deputy Prime Minister Alexander Novak also asserted that the market is "in a much better shape now," urging OPEC+ member states to "maintain full conformity" with the Declaration of
Cooperation.

Under the deal, non-OPEC countries Russia and Kazakhstan will be allowed to increase production by 130,000 and 20,000 barrels per day respectively.  

OPEC+ rescued the global oil industry from an unprecedented slump last year by slashing production when the coronavirus crisis pummeled demand. As more economic activity returned around the world, the group decided to add back 500,000 barrels per day in December.

Saudi Arabia in January voluntarily cut 1 million barrels per day, supporting markets for crude oil. The producer group’s next meeting is scheduled for April 1.