BAKU, Azerbaijan, September 11. The global oil demand growth will ease but remain solid at 1.9 mb/d in the second half of the year, driven by softening non-OECD demand and slower OECD demand growth, Trend learned from the Oxford Institute for Energy Studies (OIES).
The OIES has increased its forecast for global oil demand growth in 2023 by 130,000 barrels per day (kb/d), bringing the total to 2.1 million barrels per day (mb/d). This revision is primarily driven by stronger actual demand in the first half of the year. Notably, China's demand growth has outperformed expectations, with a year-on-year increase of 1.5 mb/d compared to the previous forecast of 1.1 mb/d. Similarly, the United States saw demand growth of 40 kb/d year-on-year in H1.
However, weaker demand growth in H1, particularly in Europe and other parts of Asia, has partially offset these positive revisions. Despite this, the overall global demand growth has been raised to 2.2 mb/d for 2023, up from the previous estimate of 1.9 mb/d. The OIES anticipates that global demand growth will ease but remain solid at 1.9 mb/d in the second half of the year, driven by softening non-OECD demand and slower OECD demand growth.
While 2023 showcases improved demand growth, the OIES has scaled back its expectations for 2024. Demand growth for that year is now projected at 1.3 mb/d, down by 130 kb/d from the previous forecast of 1.4 mb/d. This downward revision is attributed to reduced growth expectations across OECD and non-OECD regions, particularly in Asia and Latin America.
In terms of global oil supply, the OIES predicts growth of 1.3 mb/d in 2023, which is 40 kb/d lower than the previous forecast. However, supply growth is expected to increase by 150 kb/d in 2024, reaching 1.7 mb/d. The shift towards higher supply growth in 2024 is driven by the coordinated efforts of Saudi Arabia and Russia, who have extended their additional crude supply cuts until year-end. This move has led to a contraction in global supply for H2, marking the first decline since H1 2021.
Despite this, stronger actuals in H1 have led to a relatively stable global supply outlook for the entire year, with Iran's crude output increasing significantly to nearly 3.1 mb/d. Additionally, global natural gas liquids (NGLs) have seen an upgrade, rising by 120 kb/d year-on-year to reach 420 kb/d.
In terms of OPEC, total crude production is forecast to contract by 520 kb/d in 2023. Non-OPEC crude growth remains relatively unchanged at 1.2 mb/d, but year-on-year growth is expected to fall to 650 kb/d in H2 compared to 1.7 mb/d in H1.
Russian crude production has been downgraded by 80 kb/d to 9.4 mb/d as Russia adheres to its pledged voluntary supply cut targets.
For 2024, assuming the reversal of the Saudi additional 1 mb/d voluntary cut over Q1, global supply growth is upgraded by 150 kb/d to 1.7 mb/d. This upward revision is due to a 420 kb/d increase in OPEC crude and a tempered reduction of 280 kb/d in non-OPEC crude and other non-crude supply growth, bringing it to 1.1 mb/d.
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