IEA trims 2023 oil demand growth forecast, warns of “diesel tensions”
“China’s persistently weak economy, Europe’s energy crisis, burgeoning product cracks, and the strong US dollar are all weighing heavily on consumption,” the IEA says as its trims its oil demand growth forecast for next year.
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The International Energy Agency (IEA) now expects demand to grow by 1.6 million b/d next year, or 100,000 b/d less than it forecast in October.
The Paris-headquartered energy organisation sees output growth of just 740,000 b/d next year, and predicts global oil production at 100.7 million b/d.
It expects global oil supply to decline by 1 million b/d for the remainder of 2022 as OPEC+ output cuts and EU sanctions on Russian crude come into effect.
There is also an ominous warning of "diesel tensions" in the November report, with oil inventories in developed nations dropping to their lowest level since 2004 and the IEA predicting further declines as EU sanctions on Russian crude imports and maritime service bans kick in.
Increasing refinery capacity may help ease these tensions, but until then, “if prices go too high, further demand destruction may be inevitable for the market imbalances to clear,” the IEA cautions.
It also forecasts global growth in diesel and gasoil demand to ease to 400,000 b/d this year and to dip slightly in 2023, “under the weight of persistently high prices, a slowing economy and despite increased gas-to-oil switching.”
According to the IEA, the core OPEC group produced 25.40 million b/d in October, which is 1.29 million b/d lower than their combined targets. Iran, Libya, and Venezuela are exempt from production targets.
Russia and the other OPEC+ allies produced 15.12 million b/d in October, which is 1.94 million b/d lower than their combined target. Russia’s production remained 1.29 million b/d below its target in October. It has been the OPEC+ member that has underproduced the most compared to its quota.
By Konica Bhatt
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