The Organization of the Petroleum Exporting Countries (OPEC) has revised its 2023 global oil demand growth forecast in its first upward revision for months, due to China’s relaxation of COVID-19 restrictions. The revised estimate is for 2.3 million barrels per day (bpd), up 100,000 bpd from the last forecast.[0]
The group anticipates that global oil demand will exceed pre-pandemic levels in 2023, and expects a slightly tighter market than previously forecast as they have nudged up the demand estimate and trimmed their supply outlook.[1]
According to the report, OPEC’s 13 members pumped an average of 28.88 million barrels a day in January, little changed from the previous month.[2] For November last year, with prices weakening, OPEC agreed to a 2 million bpd reduction in its output target – the largest since the early days of the pandemic in 2020.[3]
An outlook of demand growth projects 400,000 bpd from Organization for Economic Cooperation and Development (OECD) countries and 2 million bpd from non-OECD countries.[4] Demand for gasoline and diesel consumption is forecast to increase 1.1 million bpd year over year and jet fuel demand is expected to rise 1.1 million bpd year over year as travel recovers.[5]
OPEC decreased their prognostication of growth in output from non-OPEC countries in 2023 to 1.4 million barrels per day, which is lower than their estimate from last month of 1.5 million bpd, due to decreased projections from Russia and the United States.[3] Last week, Russia announced that they would reduce their oil production by 500,000 barrels per day in March due to the sanctions imposed by the West as a result of their invasion of Ukraine, which included price caps on Russian oil and oil products.[1]
The report also showed that OPEC remains committed to supporting oil market stability and an investment of $12.1 trillion is required until 2045 to ensure stability in global energy markets.[6]
The tight supply and demand balance could prop up oil prices – which have held relatively steady since December at around $86 (£70) per barrel.[3] OPEC also mentioned “geopolitical tensions” as a 2023 “global economic concern” that could impact the demand for crude oil and crude oil products.[4]
Overall, the OPEC Monthly Oil Market Report showed that the demand growth forecast calls for 400,000 bpd in growth from OECD countries and 2 million bpd from non-OECD countries.
0. “OPEC raises forecast for oil demand growth to 2.3 mln bpd in 2023” News.Az, 14 Feb. 2023, https://news.az/news/opec-raises-forecast-for-oil-demand-growth-to-23-mln-bpd-in-2023
1. “OPEC raises forecast for China-led oil demand growth in 2023” TODAY, 14 Feb. 2023, https://www.todayonline.com/world/opec-raises-forecast-china-led-oil-demand-growth-2023-2108011
2. “OPEC Sees Oil Market a Bit Tighter on More Demand, Less Supply” Yahoo Canada Finance, 14 Feb. 2023, https://ca.finance.yahoo.com/news/opec-sees-oil-market-bit-131400281.html
3. “OPEC raises oil demand forecast as markets tighten and China reopens” City A.M., 14 Feb. 2023, https://www.cityam.com/opec-raises-oil-demand-forecast-as-markets-tighten-and-china-reopens/
4. “OPEC Raises World Oil Demand Forecast For 2023 | OilPrice.com” OilPrice.com, 14 Feb. 2023, https://oilprice.com/Latest-Energy-News/World-News/OPEC-Raises-World-Oil-Demand-Forecast-For-2023.html
5. “Transportation fuels drive OPEC to hike its oil demand forecast” UPI News, 14 Feb. 2023, https://www.upi.com/Top_News/World-News/2023/02/14/austria-opec-economy-us-china-oil-russia-inflation/1551676387056/
6. “Opec expects global oil demand to cross pre-pandemic levels in 2023” The National, 12 Feb. 2023, https://www.thenationalnews.com/business/energy/2023/02/12/opec-expects-global-oil-demand-to-cross-pre-pandemic-levels-in-2023