Global oil demand remains on track to grow by 2.2 million barrels per day in 2023 to 101.8 million barrels per day, led by rising Chinese consumption, jet fuel and petrochemical feedstocks.
This is what the International Energy Agency (IEA) noted in its latest report on the oil market, which was published on Wednesday, adding that by 2024, naphtha and LPG/ethane, especially in China, they will “dominate an overall increase of a more modest 990,000”. barrels per day, to 102.8 million barrels per day, reflecting below-trend GDP growth and a structural decline in road fuel consumption in major markets”.
In the report, the IEA stated that a projected increase in global oil demand of 1.5 million barrels per day in the second half of 2023 from levels in the first half of 2023 will dwarf supply by 1, 24 million barrels per day.
“Despite its difficult economic situation, China is on track to account for 75 percent of the increase in global oil demand this year, or 1.6 million barrels per day of the 2.2 million barrels per day total,” the IEA said in the report.
“But global demand growth will slow sharply to around 1 million bpd in 2024 as the recovery falters and with efficiency gains, electric vehicle penetration and working from home further suppressing consumption,” the IEA added.
According to the IEA, refiners are struggling to meet increased demand, especially for distillates.
“Rising product cracks and refinery margins near record highs have failed to deliver a meaningful lift in yields,” the September oil market report noted.
“Suboptimal crude allocations following embargoes on Russian crude and products and OPEC+ oil supply cuts have kept European and Asian OECD refineries well below year-ago levels” , added.
Focusing on production, the IEA said in the report that OPEC+ members’ production constraints of more than 2.5 million barrels per day from the start of 2023 have been offset so far with a greater supply of producers outside the alliance.
“Record supply from the United States and Brazil underpins a 1.9 million bpd increase in non-OPEC+ production from January to August, while Iran, still under sanctions, increased production around 600,000 barrels per day,” the report said.
“But starting in September, OPEC+ production loss, led by Saudi Arabia, will lead to a significant supply shortfall in the fourth quarter,” he added.
“Reducing the cuts in early 2024 would shift the balance to a surplus. However, oil stocks will be at uncomfortably low levels, raising the risk of a further spike in volatility that would be of no interest to either producers or consumers, given the fragile economic environment,” the report continues.
According to the IEA report, total OPEC+ supply increased from 42.62 million barrels per day in July to 42.75 million barrels per day in August. The group’s sustainable capacity, which the IEA defines as capacity levels that can be reached within 90 days and maintained for an extended period, is 49.41 million barrels per day, the report said.
In its previous oil market report, which was published in August, the IEA said that “global oil demand is rising to record highs, driven by strong summer air travel, increased the use of oil in power generation and the rise of Chinese petrochemical activity.”
That report predicted global oil demand would expand by 2.2 million barrels per day to 102.2 million barrels per day in 2023, “with China accounting for more than 70 percent of the growth.”
“With the post-pandemic rebound running out, and as lackluster economic conditions, stricter efficiency standards and new electric vehicles weigh on take-up, growth is forecast to slow to a million barrels per day by 2024,” the August report said.
Back in its July oil market report, the IEA revealed that global oil demand is forecast to increase by 2.2 million barrels per day in 2023 to reach 102.1 million barrels per day, “ a new record”.
“However, persistent macroeconomic headwinds, evident in a deepening manufacturing decline, have led us to revise our 2023 growth estimate downward for the first time this year, by 220,000 barrels per day,” the report stated.
“Driven by rising petrochemical use, China will account for 70 percent of global gains, while OECD consumption remains anemic. Growth will slow to 1.1 million bpd in 2024 ” added the July IEA report.
In its latest Short-Term Energy Outlook (STEO), which was released this week, the US Energy Information Administration (EIA) projected total world consumption of oil and other liquids to reach 100.97 million of barrels per day in 2023 and to 102.33 million barrels per day. in 2024.
STEO forecast demand to average 101.53 million barrels per day in the third quarter, 101.75 million barrels per day in the fourth quarter, 101.81 million barrels per day in the first quarter of 2024, 101.91 million barrels per day in the second quarter of next year, 102.80 million barrels per day in the third quarter and 102.78 million barrels per day in the fourth quarter.
Total global consumption was 99.16 million barrels per day in 2022, the latest STEO showed.
In its previous STEO, which was published in August, the IEA projected demand to be 101.19 million barrels per day in 2023 and 102.80 million barrels per day in 2024. This STEO described that total world consumption was 99.43 million barrels per day last year.
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