Global oil demand will reach a new record of 101.7 million barrels per day in 2023, driven by China’s recovery and commercial aviation, the International Energy Agency (IEA) said on Wednesday.
In the monthly report on the oil market, the IEA forecasts a demand increase of 1.9 million barrels per day this year, with aviation fuel being the main driver (840,000 barrels per day), while China is expected to contribute a similar amount after the lifting of the restrictions to stop the Covid-19.
China and Russia will be the two main players in the oil market this year, according to the agency, which brings together most of the OECD countries.
The Asian country because it will be responsible for almost half of the increase in demand, although the extent of its economic recovery and reopening after Covid-19 remains “uncertain”, and Russia because the long-term effect of international sanctions against Russian oil see against a background of growing global demand.
Prices, which were “extraordinarily volatile” in 2022 and ended the year slumping to one-year lows, began to recover slightly in early January.
While increased demand could drive prices higher in 2023, uncertainty about the international economic slowdown and the continuation of the war in Ukraine, increasing global refining capacity, and rising inventories could moderate these increases. .
On the supply side, the United States will be the largest source of the increase in world oil production, along with Brazil, Canada and Guyana, all non-members of the Organization of the Petroleum Exporting Countries (OPEC).
The authors of the report expect OPEC and its allies (OPEC+) to cut production this year by 870,000 barrels per day, while non-OPEC countries are expected to increase production by 1.9 million barrels per day. .
The decline of OPEC+ will be influenced by the impact of international sanctions against Russia, an ally of the Organization of the Petroleum Exporting Countries (OPEC), especially the European Union embargo on Russian oil transported by ship and the cap price of 60 dollars per barrel than imposed by the G7.
The IEA recalls that Russian Deputy Prime Minister Alexander Novak indicated that the country would have to reduce production in the order of 500,000-700,000 barrels per day, but estimates that Russia will have to reduce an even greater volume due to the European embargo.
Specifically, the document estimates that at the end of the first quarter, Russia will be forced to cut production by 1.6 million barrels per day from the levels prior to the invasion of Ukraine last February.
That would leave Russia’s average crude oil production at 9.7 million barrels a day in 2023, a cut of 1.3 million barrels a day in a year, down 11.8%.
The agency points out that in December Russia earned less than 3,000 million dollars from the sale of oil and that it had to make “record discounts” to sell its production.
In volume terms, Russia’s oil exports fell by 200,000 barrels per day in December to 7.8 million barrels per day due to international sanctions.
By contrast, Russia increased its diesel exports last month to a record 1.2 million barrels a day, the highest in several years, of which 720,000 barrels a day (60%) went to the European Union.
The authors of the report thus predict that the global market, with abundant supply in the first months of 2023, may suffer tensions due to the impact of sanctions on Russian exports, and point out that the risk is greater in refined products, especially diesel. .
They point out that energy saving campaigns, efficiency measures and the release of strategic oil reserves allowed countries to withstand the energy crisis generated by the invasion of Ukraine, but warn that these measures will be “more crucial than ever” this year.
Source: TSF
