OPEC Predicts Rise in Global Oil Demand In 2023

/ Oil & Gas / Wednesday, 13 July 2022 10:04

OPEC’s latest Monthly Oil Market Report (MOMR) states that tighter containment of Covid-19 and expected strong global economic growth are projected to support global oil demand in 2023, which is forecast to grow by 2.7 mb/d y-o-y to average 103.0 mb/d. It further states that OECD oil demand is forecast to rise by 0.6 mb/d. Non-OECD oil demand is projected to increase by 2.1 mb/d, mostly in China and India, supported by a recovery in transportation fuels and strong industrial fuel demand, including petrochemical feedstock.

In terms of fuels, gasoline and diesel are expected to lead oil demand growth in 2023, based on increasing mobility in major consuming countries such as the US, China and India. Both on-road diesel, including trucking as well as increasing industrial, construction and agricultural OECD activities in      America, Europe and China will support diesel demand, the report states.

Light distillates will be supported by capacity additions – NGL plants in the US, Propane Dehydrogenation (PDH) plants in China and steady petrochemical margins. Increased domestic and international air travel will drive jet fuel demand, but business travel may continue to lag due to Covid 19 related challenges, particularly in China, in addition to other geopolitical uncertainties.

The report forecasts non-OPEC oil supply to grow by 1.7 mb/d  y-o-y in 2023, supported by stronger demand. Upstream investment in non-OPEC countries is expected at around $415 billion, broadly the same level as in 2022 and 18% more than in 2021, noting that level is still only half of the $755 billion of 2014. New production by projects sanctioned up to 2023 is forecast at around 19.7 mb/d, up by 10% compared to the 17.8 mb/d in 2022. Liquids production growth in the US is forecast at 1.1 mb/d, mainly from US Permian crude and non-conventional NGLs as well as from the Gulf of Mexico. Oil production in Norway, Brazil, Guyana, Kazakhstan and Argentina is forecast to increase through new field start-ups as well as the ramp-up of existing projects. Moreover, non-OPEC processing gains and OPEC NGLs are forecast to grow by 70 tb/d and 50 tb/d respectively, y-o-y.

The report forecasts that both a strong world oil demand along with non-OPEC supply leading demand for OPEC crude will increase by 0.9 mb/d y-o-y to average 30.1 mb/d.  The report notes that  “uncertainty to the forecast remain to the downside, with much depending on the course of the pandemic and related measures, global financial tightening in the light of growing inflation and the resolution of ongoing geopolitical issues in Eastern Europe.”

World oil demand growth in 2022 remains unchanged from the previous month’s assessment at 3.4 mb/d. Oil demand in the OECD is estimated to increase 1.8 mb/d, while non-OECD is seen growing by 1.6 mb/d. Total oil demand is projected to average 100.3 mb/d. The first quarter of 2022 was revised higher, amid better-than-expected oil demand in the main OECD consuming countries. However, with the resurgence of Covid-19 in China and the war in Ukraine, oil demand in 2Q22 is revised lower.

Also read: Factors for Underinvestment in Upstream Sector

Also read: UAE Producing Near To Maximum Oil Output, Says Energy Minister

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