EIA estimates global supply tightening to push Brent higher this year

Oil production cuts by Saudi Arabia and Russia coupled with rising oil demand will shrink global oil inventories, the US Energy Information Administration (EIA) has predicted.

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Global oil supply tightening could drive the Brent price higher through the end of this year and in the first half of next year.

In its August short-term energy outlook report, EIA has forecast the Brent spot price to average $83/bbl in 2023 and $86 in 2024. This indicates an upward revision of $2/bbl for both 2023 and 2024 from its July outlook.

However, the Brent spot price is expected to face some downward pressure starting in the second half of next year, as global oil production would catch up with global oil demand, said the US energy market watchdog.

Demand and supply outlook

This year’s global oil production is expected to increase by 1.4 million b/d over the last year, according to the EIA. Oil production is now forecast to reach 101.3 million b/d in 2023, up around 150,000 b/d from its July estimate.

Global oil production is expected to grow by another 1.7 million b/d in 2024, to approximately 103 million b/d. The projection is 200,000 b/d higher than the EIA's previous forecast.

The majority of global crude oil production growth will come from non-OPEC producers, the report said.

US crude oil production is expected to average 12.8 million b/d in 2023 and 13.1 million b/d in 2024.

By Konica Bhatt

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