OPEC cut its world oil demand forecast for the fourth quarter of 2021 on Thursday as high energy prices stifle recovery from COVID-19, pushing back the timeline for returning to pre-pandemic levels of oil use until later in 2022.

In a monthly report, the Organization of Petroleum Exporting Countries raised its supply forecast from U.S. shale producers for next year, potentially undermining the group's and its allies' efforts to balance the market.

OPEC forecasts oil demand to average 99.49 million barrels per day (BPD) in the fourth quarter of 2021, a 330,000 BPD decrease from last month's forecast. The demand growth forecast for the year has been reduced by 160,000 BPD to 5.65 million BPD.

"A slowdown in the pace of recovery in the fourth quarter of 2021 is now assumed due to elevated energy prices," OPEC said in the report. OPEC also cited slower-than-expected demand in China and India for the downward revision.

Oil has risen to a three-year high above $86 per barrel this year as OPEC+ gradually ramps up supplies and demand rises, causing pump prices in some markets to reach their highest levels in years. Natural gas, electricity, and coal prices have all risen.

Governments, businesses, and traders are all keeping a close eye on how quickly demand recovers. A slower pace could alleviate upward pressure on prices and support the view that the pandemic's impact will reduce demand for goods.

OPEC raises 2021 world oil demand growth forecast | Energy Asia

OPEC now expects global consumption to exceed 100 million BPD in the third quarter of 2022, three months later than predicted last month. According to OPEC, the world used more than 100 million barrels per day of oil in 2019.

The producer group maintained its forecast of a 4.15 million BPD increase in demand next year. This will increase consumption to an average of 100.6 million bpd, a level higher than in 2019.

The report also showed increased output from OPEC and predicted increased supplies from US shale producers in 2022.

OPEC+ is gradually unwinding last year's record output cuts. In July, the group agreed to gradually increase output by 400,000 BPD per month beginning in August.

According to the report, OPEC output increased by 220,000 BPD in October to 27.45 million BPD, with top producer Saudi Arabia accounting for half of the increase. Due to a lack of capacity, four of the 13 OPEC members reduced their output.

OPEC expects US tight oil output, also known as shale oil, to rise by 610,000 barrels per day (BPD) in 2022, up 200,000 BPD from last month's forecast, following a contraction this year as higher prices prompt more investment.

Despite this, OPEC maintained its non-OPEC overall supply growth forecast for 2022, owing to downward revisions in other producers.

With lower demand now apparent, OPEC expects the world to require 28.7 million BPD from its members in 2022, a 100,000 BPD decrease from last month but still allowing for increased OPEC production.