Global oil demand is set to increase by 2 million barrels per day (bpd) this year, pushed up by growth in Chinese consumption after the reopening, the International Energy Agency (IEA) said on Wednesday as it raised its 2023 demand growth estimate by 100,000 bpd from last month’s forecast.
This year, world oil demand is set to average a record 101.9 million bpd, up by 2 million bpd from 2022, the IEA said in its closely-watched Oil Market Report today. The increase is 100,000 bpd higher than the 1.9 million bpd rise the agency expected at the time of the publishing of its January report.
China’s resurgent oil demand – with growth seen at 900,000 bpd this year – and the rest of the Asia-Pacific region will dominate global growth, the IEA said. The reopening of the Chinese borders is leading to an increase in air travel and jet fuel demand, which is set to rise by 1.1 million bpd to 7.2 million bpd this year. Jet fuel demand is expected to rebound to 90% of 2019 levels, the IEA said.
“World oil demand growth is picking up after a marked slowdown in the second half of 2022 and a year-on-year contraction in the fourth quarter. China accounts for nearly half the 2 mb/d projected increase this year, with neighbouring countries also set to benefit after Beijing ditched its zero-Covid policies,” the IEA said in the report.
Global oil supply, meanwhile, appears to be exceeding demand and could continue to do so by the middle of this year, but the market could swing into a deficit soon after that.
“World oil supply looks set to exceed demand through the first half of 2023, but the balance could quickly shift to deficit as demand recovers and some Russian output is shut in,” the IEA said.
Russia’s announced cut of 500,000 bpd in production for March could be a sign that Moscow may be struggling to place all of its barrels, the international agency said.