BAKU, Azerbaijan, September 17. Among the OECD regions, Europe is expected to be the sole region experiencing a decrease in demand in 2023.
According to the data obtained by Trend from the International Energy Agency (IEA), the agency anticipates a decline of 70,000 b/d, bringing the total to 13.4 mb/d.
This contraction is particularly noticeable in the consumption of gasoil, which is set to decrease by 180,000 b/d, and naphtha, with a decrease of 100,000 b/d. These declines underscore the challenging state of manufacturing activities in the region, albeit partially offset by a 130,000 b/d increase in jet and kerosene consumption.
As the IEA reported, in the second quarter, OECD Europe experienced year-on-year growth, with an increase of 80,000 b/d. However, the agency believes that this growth will be short-lived. The second quarter of 2023 saw a notable improvement primarily due to a favorable comparison with the earlier period of subdued demand in the aftermath of Russia's invasion of Ukraine. Additionally, there was a relatively easy rebound in jet and kerosene demand, contributing an additional 150,000 b/d to the growth.
The recovery in jet fuel consumption had been significant since mid-2022, which means that year-on-year gains are likely to taper off, the IEA explains. A less optimistic macroeconomic outlook is expected to result in a further decline in gasoil demand, which is the dominant oil product in the region. In the latter half of 2023, the IEA projects a decrease of 230,000 b/d in gasoil demand for OECD Europe.
Looking ahead to 2024, the agency projects a further drop in total demand, with a decrease of 100,000 b/d. This decline is primarily driven by a reduction of 130,000 b/d in gasoil demand, as more consumers transition away from diesel-engine vehicles. While the rebound in jet fuel consumption is expected to be nearly complete, there is limited optimism for a significant recovery in petrochemical operations.
