Oil demand progress is ready to speed up subsequent yr, with world demand averaging a document 101.6 million barrels per day (bpd) and exceeding pre-COVID ranges, the Worldwide Vitality Company (IEA) stated on Wednesday in its first outlook for 2023.
“Whereas larger costs and a weaker financial outlook are moderating consumption will increase, a resurgent China will drive positive factors subsequent yr, with progress accelerating from 1.8 mb/d in 2022 to 2.2 mb/d in 2023,” the IEA stated in its closely-watched Oil Market Report for June revealed in the present day.
Subsequent yr, world oil provide might battle to meet up with demand, the company stated, as sanctions on Russia would curtail extra provide after they formally enter into power on the finish of this yr.
“World oil provide might battle to maintain tempo with demand subsequent yr, as tighter sanctions power Russia to close in additional wells and a variety of producers bump up in opposition to capability constraints,” the IEA stated.
Provide from non-OPEC+ producers will lead output will increase by way of the top of subsequent yr, whereas OPEC+ provide may drop with full-force embargoes on Russian oil within the West and producers exterior the Center East struggling to extend manufacturing, in keeping with the company.
OPEC+ is ready to unwind all of the document cuts it made firstly of the pandemic, however this may erode the spare capability cushion globally, the IEA famous.
Refining capability—which has dropped by some 3 million bpd since COVID—is anticipated to rise by 1 million bpd this yr and 1.6 million bpd subsequent yr, per the company’s estimates.
“Nonetheless, product markets are anticipated to stay tight, with a selected concern for diesel and kerosene provides,” stated the IEA.
“OECD business shares of center distillates have fallen by 25% since January 2021 to their lowest ranges since 2004. That very restricted cushion is driving center distillates costs to document highs, with a knock on impact for different merchandise which may trigger extra ache on the pump simply as pent-up demand is unleashed throughout the peak driving and summer season cooling season,” the company added.
By Tsvetana Paraskova for Oilprice.com
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