World Oil Demand Forecast Remains Steady at 2.33mbpd—OPEC

May 12, 2023
oil demand worries

By Adedapo Adesanya

The Organisation of the Petroleum Exporting Countries (OPEC) has stated that the global oil demand forecast for 2023 was steady for a third month.

In its report, the producer group says world oil demand in 2023 will rise by 2.33 million barrels per day (bpd) or 2.3 per cent. This was virtually unchanged from the 2.32 million barrels per day forecast last month.

OPEC noted that the potential Chinese growth that lent the support would be offset by downside economic risks elsewhere, such as the US debt ceiling.

“Minor upward adjustments were made due to the better-than-expected performance in China’s economy, while other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand,” OPEC said in the report.

Chinese oil demand is now expected to rise by 800,000 barrels per day, OPEC said, up from the 760,000 barrels per day forecast last month, adding to a recovery after strict COVID-19 containment measures were scrapped.

The global growth figure, however, was unchanged for a third straight month, and OPEC left its 2023 economic growth forecast at 2.6 per cent, citing potential downside risks such as inflation and increasing debt payments from higher interest rates.

“In addition, the US debt ceiling issue has so far not been resolved, a matter that could have economic consequences,” OPEC said in its economic commentary.

A new round of oil output cuts announced on April 2 by some members of OPEC+, which comprises OPEC, Russia and other allies, has failed to boost oil prices that further interest rate hikes and concern over the US debt ceiling have hit.

This is the last monthly OPEC report before OPEC+ holds its next policy meeting on June 4.

The report also showed OPEC’s oil production fell in April, reflecting the impact of earlier output cuts pledged by OPEC+ to support the market as well as some unplanned outages.

For November last year, with prices weakening, OPEC+ agreed to a 2 million barrels per day reduction in its output target – the largest since the early days of the COVID-19 pandemic in 2020. The April 2 voluntary cuts add to this total.

OPEC said its April output fell by 191,000 barrels per day to 28.60 million barrels per day, with declines in Iraq and Nigeria.

Iraq’s northern exports were halted, while some of Nigeria’s exports were disrupted by a labour dispute involving ExxonMobil workers.

The report kept its forecast that non-OPEC supply would rise by 1.4 million barrels per day in 2023 and flagged factors that could limit or curb supplies, such as investment levels and the war in Ukraine.

While overall investment levels in non-OPEC supply in 2023 are expected to be just above pre-pandemic levels, they are still short of a $747 billion high reached in 2014 as oil companies focus on capital discipline, OPEC said.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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