IEA raises its demand forecast for 2023 for second straight month

The International Energy Agency (IEA) now expects demand to grow by 1.9 million b/d this year, or 200,000 b/d more than it forecast in December 2022, “with nearly half the gain from China following the lifting of its Covid restrictions.”

PHOTO: Getty Images

The optimistic outlook comes a day after OPEC reiterated its forecast for a rise in global oil demand this year by 2.2 million b/d to 101.8 million b/d.

The IEA regards China and Russia as "two wild cards" that could dominate oil markets this year. According to the report, global oil demand will soar to a record 101.7 million b/d but will tighten the oil market balance as Russian supplies slow.

The IEA hints at a potential oversupply of oil in the market because "slow demand recovery expected in the first half of this year suggests continued inventory builds." However, it does not expect it to last until the end of the year.

Despite its forecast output growth of 1 million b/d this year which is 300,000 b/d more than its December forecast, the Paris-based energy organization predicts that the “well-supplied oil balance” at the start of the year could tighten quickly as sanctions hurt Russian exports.

According to the IEA, the core OPEC group produced 24.64 million b/d in December, which is 780,000 b/d lower than their combined targets. It is pertinent to note that Iran, Libya and Venezuela are exempt from production targets.

Russia and the other OPEC+ allies produced 15.34 million b/d in December, which is 990,000 b/d lower than their combined target. Russia's production declined to 710,000 b/d below its target in December. It has been the OPEC+ member that has underproduced the most compared to its quota.

By Konica Bhatt

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