“Growth in global oil demand is set to stall in the fourth quarter of this year as the economic slowdown deepens,” the International Energy Agency (IEA) said today, but said it would resume strongly in 2023.
The agency’s forecast maintains a view of a relatively bullish market next year despite the economic headwinds. The forecast is based on the expectation that the corona closures in China will moderate while the growth in flights will increase the demand for jet fuel. “Global oil demand remains under pressure from the faltering Chinese economy and a continued slowdown in OECD economies.” The International Energy Agency cut its demand growth forecast this year by 110,000 barrels per day (bpd) to 2 million barrels while maintaining its 2023 growth forecast of 2.1 million barrels.
The rich countries of the OECD organization were responsible for most of the increase in demand this year, while the countries outside the organization, especially China, will support growth next year provided that Beijing dilutes the corona restrictions. “Non-OECD countries will cover three-quarters of the 2023 gains if China does reopen as expected,” the International Energy Agency added.
Offsetting the damage to the economy’s demand, and switching from gas to oil for electricity generation, will lead to a decline of 700,000 barrels per day in the last quarter of this year and the first quarter of next year, especially in Europe and the Middle East.
Meanwhile, Russian oil exports are expected to be hit, as the European Union plans to impose sanctions on shipping services that transport it on December 5. Sanctions will cut Russian oil production to 9.5 million barrels by February next year, the International Energy Agency said – down 1.9 million barrels per day from February 2022. The G7 countries’ plan to cap selling prices for Russian oil rather than ban trade could ease losses goddess.
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