Global oil demand will increase by 2.2 million barrels per day (MMbpd) to reach a record high of 102.1 MMbpd in 2023, the International Energy Agency (IEA) said in its latest oil market report (OMR).
China will account for 70 percent of global gains on the back of increasing petrochemical use, the IEA said. However, “China’s widely anticipated reopening has so far failed to extend beyond travel and services, with its economic recovery losing steam after the bounce earlier in the year”, the agency said.
The IEA projects growth to slow to 1.1 MMbpd in 2024. “World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries over the past twelve months”, the IEA said.
The IEA forecast global oil production to rise by 1.6 MMbpd to 101.5 MMbpd, as output from non-OPEC+ nations is expected to increase by 1.9 MMbpd. In 2024, the agency sees global oil supply rising by 1.2 MMbpd to a new record of 102.8 MMbpd, with non-OPEC+ nations accounting for all of the increase.
Lower output from Saudi Arabia and core OPEC+ members, since production cuts were first implemented last November, has been offset by higher output from other producers, according to the report. Supply from the USA rose by 610,000 bpd with natural gas liquids jumping to all-time highs while biofuels increased seasonally. However, the IEA predicts that global supply could fall by more than 1.0 MMbpd this month as Saudi Arabia implements steeper cuts.
Observed global oil inventories rose by 19.4 million barrels in May to the highest level since September 2021, as a surge in China led to a 44.2 million barrel build in nations not part of the Organization for Economic Cooperation and Development (OECD). OECD industry stocks rose by 170,000 bpd in May, while China posted its largest monthly increase in crude stocks in a year at 1.1 MMbpd. China’s recent buying spree included heavily discounted Russian and Iranian barrels, the report said.
In its April OMR, the IEA projected that world oil demand will climb by two million barrels per day in 2023 to “a record 101.9 million barrels per day”. Non-OECD countries, buoyed by a resurgent China, will account for 90 percent of growth, the April OMR noted.
In May, the IEA had boosted forecasts for global oil demand as China reopened its economy following years of anti-Covid lockdowns. The agency raised global demand estimates by a hefty 500,000 barrels a day for the first quarter, and by just under half as much for the year as a whole. As a result, world consumption would climb by 2.0 million barrels a day this year to average 101.9 million a day, it had predicted.
Meanwhile, according to a separate report by the IEA, fossil fuel supply investments are set to rise by more than six percent to around $950 billion for 2023, based on an analysis of the announced spending plans of large- and medium-sized oil, gas, and coal companies.
However, the use of oil for transport fuels will decline after 2026, and growth in oil demand will “slow almost to a halt in the coming years”, the IEA said.
