Oil consumption well on its way to an all-time high: the International Energy Agency (IEA) is revising upwards its forecast for global demand growth in 2023 which is heading for its “highest level ever registered” before a slightly less marked increase in 2024.
Never has the world been so greedy for oil. Without waiting to draw an annual report, world oil demand has already “reached a record 103 million barrels per day (mb/d) in June and August could experience a new peak”, underlines the agency, an emanation from the Paris-based OECD, in its monthly report released on Friday. Consumption is “boosted by summer air travel, the increased use of petroleum (fuel oil) to generate electricity and the surge in Chinese petrochemical activity,” explains the IEA.
For the full year, global demand for black gold “is expected to increase by 2.2 million barrels (mb/d) per day” compared to 2022 “to reach 102.2 mb/d in 2023, China representing more than 70% of the growth”, specifies the agency. This is the “highest annual level ever recorded”, according to the IEA which already forecast in February a record for the current year, of 101.9 million barrels per day, after 99.9 mb / d in 2022 and 97.6 mb/d in 2021.
This thirst for oil comes in a context of tensions on the markets after drastic cuts in the supply decided by several countries of the OPEC alliance, made up of 13 oil exporting member countries and 9 allies, to support the price. As a result, last month, global oil supply fell by 910,000 barrels per day to 100.9 mb/d.
The “sharp reduction in Saudi production in July caused production in the OPEC bloc to fall by 1.2 mb/d to 50.7 mb/d”, “close to a two-year low”, while “the Non-OPEC volumes increased by 310,000 barrels per day to reach 50.2 mb/d,” according to the IEA. Nine members of OPEC, including its two heavyweights Ryad and Moscow, have introduced voluntary production cuts since May for a total of 1.6 million barrels / day. Cuts subsequently extended until the end of 2024.
At the same time, Saudi Arabia opted for a new production cut of one million barrels/day for July, extended until August, then until September. Moscow had for its part committed to lowering its exports by 500,000 barrels/day in August, then by 300,000 barrels/day in September.
What bring the market balance to “tighten further in the fall,” warns the IEA. “If the alliance’s current targets are maintained, oil inventories could decline by 2.2 mb/d in the third quarter and 1.2 mb/d in the fourth quarter, which could lead to a further increase in oil prices. price”.
Russian oil exports were flat at around 7.3mb/d in July, down 200,000b/d. “Rough exports to China and India were down month-on-month, but accounted for 80% of Russian shipments,” the IEA said. Higher oil prices, combined with lower rebates from Russia “pushed estimated export earnings from $2.5 billion to $15.3 billion,” a decline of 4 .1 billion over one year but “their highest level since November 2022”.
Over the year, the IEA expects world oil supply to increase by 1.5 mb/d to a record 101.5 mb/d, growth driven in particular by the United States (1 .9 mb/d). However, the agency estimates that the increase in oil demand will be less strong in 2024 than in 2023, when the world must reduce its consumption of fossil fuels, harmful to the climate, in order to limit global warming to 1.5°C compared to the pre-industrial era.
The post-pandemic recovery “running out of steam” and “the energy transition accelerating” with electric cars, “growth will slow down by 1 mb/d in 2024”, predicts the agency.
