OPEC said today that it sees oil demand dropping even further this year, and has lowered its growth projections for 2021. As reported by CNBC, the group attributes the revisions to the ongoing global wave of increasing coronavirus cases. 

In its latest report, OPEC cited ramifications from measures put in place to contain the spread of the coronavirus "with the accompanying adverse impacts on transportation and industrial fuel demand through mid-2021." 

oil drilling rigs with a red arrow trending down for lowering oil demand

Image source: Getty Images.

The new figures from OPEC estimate that oil demand will be down 9.8 million barrels per day (b/d) versus 2019, from its previous target of a 9.5 million barrel drop. By comparison, the International Energy Agency (IEA) said in its October oil market report that it believes demand will be lower by 8.4 million b/d. It's possible the IEA will also revise estimates in its November report based on recent COVID-19 trends. 

For 2021, OPEC sees demand rising by 6.3 million b/d on an annual basis, lower than the 6.5 million it estimated last month and the 7.0 million it estimated in July 2020. The IEA is currently even less optimistic, with a prediction of demand rising by 5.5 million b/d. 

The price of oil is driven by demand and supply. The group of oil producing nations known as OPEC+ agreed to cut production earlier this year, but have scaled back the level of cuts since. The move helped stabilize the price of oil near $40 per barrel, and recent news of high efficacy levels from a COVID-19 vaccine also boosted prices. But a time frame for vaccinations to be fully implemented has prompted OPEC to assume that the effects on demand will linger well into 2021.