Oil demand will climb by 2 million barrels per day (bpd) in 2023, according to the International Energy Agency (IEA). The IEA expects demand to reach a record 101.9 million bpd within the year.
In its latest Oil Market Report published on Friday, the IEA found that China will account for a large proportion of market growth. Around 90% of next year’s growth will come from OECD nations, “buoyed” by China.
Across OECD nations, demand fell by 390,000 bpd year-on-year for 2023’s first quarter; the second consecutive quarter to see decline.
Recent production cuts announced by the OPEC+ group will push supply down by 400,000 bpd by the end of 2023, the report says. It predicts that production cuts from OPEC+ will drive prices higher, having negative effects on global attempts to reduce inflation.
“This forecasts badly for economic recovery and growth,” IEA analysts said. “Consumers confronted by inflated prices for basic necessities will now have to spread their budgets even more thinly.”
Following the publication of the report, the price of Brent Crude oil rose from $85.62 to $86.10. Prices soared by as much as $7 a barrel earlier this month, following the announcement of production cuts from OPEC+.
The group’s decision to cut oil production by 1.16 million barrels per day, on top of pre-established production cuts, caused frustration among world leaders who criticised resulting market uncertainty. At the time, ICE Brent oil futures fell to a 15-month low of $71 per barrel.
Kerosene production, for jet fuel, is expected to account for 57% of 2023 gains in oil demand, according to the IEA. Additionally, global refining throughput is forecast to average 82 million bpd this year.