World oil demand ‘on track’ to rise by 2.3 million b/d in 2023 – IEA
The Paris-headquartered energy agency estimates that global oil demand will rise by 2.3 million b/d in 2023, with China contributing 78% of that growth.
PHOTO: Oil pump jacks at dusk. Getty Images
The IEA expects global oil demand to touch 101.7 million b/d in 2023, a slight decline of 90,000 b/d from its previous monthly Oil Market Report (OMR). The agency predicts that global oil demand growth will ease to 1.1 million b/d in 2024, as GDP growth in major economies slows down.
Deteriorating macroeconomic conditions, coupled with factors such as increased global energy efficiency improvement and a growing electric vehicle fleet, will further reduce crude oil demand in 2024, the IEA said.
The IEA expects global oil supply to be driven by non-OPEC producers, with Brazil and Guyana producing record-high volumes. The US will lead non-OPEC and push world oil output by 1.8 million b/d to 101.9 million b/d in 2023 and by another 1.2 million b/d in 2024. The non-OPEC producers would further ramp up production after OPEC+ deepens its voluntary oil cuts, the IEA stated.
“Oil market sentiment turned decidedly bearish in November and early December as non-OPEC+ supply strength coincided with slowing global oil demand growth,” the IEA said in its OMR.
According to IEA, the voluntary production cuts by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) will lead to a 51% decrease in their share of the global oil market by 2023. The IEA noted that the global oil supply is being redistributed, with major producers in the Middle East losing their dominance to the US and other Atlantic Basin nations. The thriving petrochemical industry in China is also contributing to the changing landscape of global oil trade, the IEA stated.
“East of Suez markets have already absorbed the majority of Russian flows following the invasion of Ukraine as well as rising Iranian exports, but now must adjust to increasing volumes of Atlantic Basin crude and NGLs,” the energy agency added.
The IEA reported that refinery margins in Europe and Singapore “rebounded marginally” in November. However, weaker diesel and gasoline cracks “drove much of the US hub’s decline.” The agency anticipates global refinery crude runs in the fourth quarter of 2023 to be “materially weaker than previously estimated on deeper and longer refinery turnarounds.”
By Aparupa Mazumder
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