Global oil demand is expected to increase by 2 million barrels per day, mbd, to a record 101.9 mbd in 2023, the International Energy Agency (IEA), stated in its latest market report.
Oil demand growth is characterized by widening regional disparities, with the non Organisation for Economic Co-operation and Development, OECD, countries accounting for 87 per cent of the growth and China alone making up more than half the global increase, according to IEA.
OECD demand, dragged down by weak industrial activity and warm weather, contracted by 390,000 b/d year-over-year (y-o-y) in first-quarter 2023, its second consecutive quarter of decline. “
While oil demand in developed nations has underwhelmed in recent months, slowed by warmer weather and sluggish industrial activity, robust gains in China and other non-OECD countries are providing a strong offset.
In first-quarter 2023, OECD oil demand fell 390,000 b/d y-o-y, but a solid Chinese rebound lifted global oil demand 810,000 b/d above year-earlier levels to 100.4 million b/d.
A much stronger increase of 2.7 million b/d is expected through year-end, propelled by a continued recovery in China and international travel,” IEA stated.
The report also explained that by product categories, jet/kerosene accounts for 57 per cent of 2023 gains.
“The apparent weakness in industrial activity is impacting gasoil demand, whereas the services sector and personal consumption are driving gasoline and jet uptake,” IEA said.
Meanwhile, surprise OPEC+ production cuts announced on Apr. 2 are likely to exacerbate an expected oil supply deficit in second-half 2023 and push prices higher amid heightened economic uncertainty.
The bloc’s self-described “precautionary move” immediately triggered a $7/bbl jump in North Sea Dated crude to $85/bbl, up nearly $15/bbl from March lows.
The latest OPEC+ voluntary curbs of 1.16 million b/d also come on top of an announced 500,000 b/d cut in Russian output from March that has now been extended through the rest of the year, and a 2 million b/d reduction in targets taking effect last November.
