Global oil demand on track to grow by 2.2 million b/d in 2023 - IEA

Global oil demand is expected to grow by 2.20 million b/d to 101.80 million b/d this year due to strong consumption in China, and higher jet fuel demand, the International Energy Agency (IEA) has stated.

PHOTO: An oil refinery behind a pumpjack. Getty Images

Despite China’s current economic hurdles, the country is set to account for approximately 75% of the demand growth or 1.6 million b/d in 2023, the Paris-headquartered organisation said in its monthly Oil Market Report (OMR).

The intergovernmental body further added that refiners are facing difficulties to “meet increased demand.” The OPEC+ supply reductions have curbed European and OECD Asian refinery run rates “well below year-earlier levels”, IEA said.  

However, the International Energy Agency (IEA) also sees a 1 million b/d decline in oil demand growth in 2024. Stricter efficiency standards and new electric vehicles could weigh on oil demand, it added.

The oil market is headed for a “substantial deficit” in the fourth quarter of 2023 due to the extension of oil supply cuts by top oil producers Saudi Arabia and Russia, the IEA said.

So far this year, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have collectively cut down on crude production by more than 2.50 million b/d with “overall losses tempered by sharply higher Iranian flows,” the IEA estimates.

Total Russian oil exports in August decreased by 150,000 b/d to 7.20 million b/d, according to the IEA. “The Saudi-Russian alliance is proving a formidable challenge for oil markets,” stated the energy market watchdog.

“Oil stocks will be at uncomfortably low levels, increasing the risk of another surge in volatility that would be in the interest of neither producers nor consumers, given the fragile economic environment,” the IEA further added.

However, non-OPEC+ producers have supported world oil supply this year, with record supply in the US and Brazil. Global oil output is projected to increase by 1.5 million b/d to 101.5 million b/d in 2023, with the highest production from the US, Iran, and Brazil. “Unwinding cuts at the start of 2024 would shift the balance to a surplus,” the IEA stated.

By Aparupa Mazumder 

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