Opec cut its oil demand projection by a further 400,000 barrels per day for this year and next, despite a pick-up in consumption from OECD countries.
Oil demand is expected to decline by 9.5 million barrels per day, resulting in overall demand of 90.2m bpd this year.
However, the group's demand forecast for the OECD group of countries was revised upwards by 100,000 bpd, as the decline in demand witnessed in some sub-regions is not as severe as previously anticipated.
"OECD Americas posted less-than-expected declines, driven by stable petrochemical feedstock demand, while increases in heating fuel restocking eased demand impairment in OECD Europe,” Opec said in its latest monthly market report.
Demand from South Korea was also “better than expected” in the second quarter of the year, despite marginally easing, the report said.
Meanwhile, a steady increase in industrial activity provided a boost to petrochemical feedstock and diesel requirements.
However, the forecast for non-OECD regions was revised downwards by 500,000 bpd due to a slowdown in economic activity in Asia due to the rising number of cases.
India has seen a surge in the number of Covid-19 infections, which has pushed South Asia’s biggest economy to become the worst affected in the world after the US.
Second quarter oil demand in China, meanwhile, was adjusted higher to reflect better-than-expected data, Opec said.
Weakness in oil demand from Asia is expected to spill over to the first half of next year, while a "slower recovery in transportation fuel requirements" will also limit demand growth potential from OECD countries.
Opec's overall forecast for 2021 is also 400,000 bpd lower, but it still expects demand to rise "solidly” by 6.6m bpd, to 96.9m bpd.
This is based on an assumption that global economic activity will grow by 4.7 per cent next year, although it said risks remain elevated and “tilted to the downside” in relation to the ongoing pandemic and the potential for a vaccine.
Opec, which turned 60 on Monday, reiterated its commitment to the Declaration of Cooperation, a mechanism through which it is balancing the oil markets alongside non-member producers led by Russia.
The group is drawing back 7.7m bpd from the markets from August 1 onwards. Opec+, as the alliance is known, earlier cut 9.7m bpd from the markets between May and July to counter a record slump in demand and prices.
Opec secretary general Mohammad Barkindo said in an op-ed published in The National on Monday that "green shoots of recovery" were being seen in the oil markets.
"However, with the global economy still on an unsure footing and with the oil market not expected to see demand return to 2019 levels before 2022, the DoC will remain to take any necessary actions to help ensure a balanced and stable oil market,” he wrote.
Oil prices remained below $40 on Monday with Brent, the most widely-traded crude benchmark, down 0.3 per cent at $39.71 per barrel at 8.05pm UAE time. West Texas Intermediate, which tracks US crude grades, was marginally higher $37.34 per barrel.
Opec+ is set to convene its joint technical and ministerial monitoring committees on September 16 and 17, respectively, to review levels of compliance among producers.
