Oxford Institute for Energy Studies slashes 2022, 2023 oil demand outlook

The Oxford Institute for Energy Studies (OIES) has trimmed both its global oil demand and supply growth forecasts for this year and 2023, citing macro pressures on global economies.

PHOTO: The Oxford Institute for Energy Studies expects slower oil demand growth to overshadow supply constraints. Getty Images

The OIES now forecasts that oil demand growth will be 1.8 million b/d this year and slow to 1.7 million b/d next year. Both of these growth rates are 0.4 million b/d lower than previously forecast.

It revised its gobal oil supply growth forecast for 2022 down by 0.2 million b/d to 4.6 million b/d, and expects this downward trend to accelerate next year with a 0.7 million b/d downward revision to 1 million b/d.

Weaker growth to overshadow supply constraints

The OIES expects weaker global economic growth in 2023 due to inflationary pressures, monetary policy tightening and a slower Chinese demand recovery.

University of Oxford-affiliated research institute expects macro pressures to dominate oil supply factors, as well as a large Russian supply disruption.

According to the report, disrupted production from Russia in 2023 will range between 935,000 b/d and 1.6 million b/d in view of its resilience and ability to redirect sanctioned crude. It projects Russian crude production to drop from 10.6 million b/d to 9.8 million b/d in 2023.

The OIES predicts that OPEC+ will cut its oil production quota by between 880,000 b/d and 1.2 million b/d instead of the 2 million b/d agreed by the members, citing underproduction in most countries.

As a result of weaker demand, the OIES anticipates Brent to remain in the low $90s for the rest of the year, and then further retreat into the $80s in the first half of 2023.

The price of Brent is expected to rebound during the second half of 2023 and may surpass $100/bbl during the fourth quarter of 2023. A price range of $70-110/bbl is predicted for 2023.

By Konica Bhatt

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