The International Energy Agency raises estimates and expects overall demand to rise by two million barrels

World oil demand to hit record high in 2023

photo_camera PHOTO/REUTERS - Saudi Arabian Energy Minister Prince Abdulaziz bin Salman and his Russian counterpart Alexander Novak at an OPEC and non-OPEC meeting in Vienna

The International Energy Agency (IEA) assessed global oil demand for 2021, noting that the main importer of crude oil is China. The country is reopening its economy three years after the pandemic. According to IEA estimates, global oil demand will rise by about 2 million barrels per day to 101.9 million bpd this year, last month's forecast was for growth of 1.9 million.  Analyzing that the world will consume 101.9 million barrels per day in 2023, it could become an annual record, but the situation is in jeopardy because it could change rapidly as demand picks up and Russia's production shuts down.

The Paris-based agency said in one of its oil market reports that "almost a year on from Russia's invasion of Ukraine, global oil markets are trading in relative calm"; it also said China will resume its well-established role as a major growth driver of global oil demand this year. The IEA said China is hopeful of a 900,000 barrels per day increase in growth to reopen its borders by boosting air traffic. In addition, it estimated that fuel demand in the aviation sector will rise from 1.1 million bpd to 7.2 million bpd, recovering to 90% of the levels recorded in 2019.    


Regarding Russia, the agency expects Russian supply to contract these years due to Western sanctions, however, the report indicates that its exports increased last month to 8.2 million bpd. Russia is also the world's second largest oil producer after Saudi Arabia. Saudi Arabia's energy minister, Abdulaziz bin Salman, said he was concerned about possible energy supply cuts as a consequence of the sanctions. The IEA expects Russian production to be around 10 million barrels per day. Russia announced last week that it would cut oil production by 500,000 barrels per day from March.  It warned that "the balance could quickly turn into a deficit as demand picks up and some of Russia's production is shut in". Russia's oil exports rose by 300,000 bpd in January from a month ago to 8.2 million bpd.    


Russia's deputy prime minister, Alexander Novak, said revenues for the Russian government in the oil and gas sector will increase by 28% in 2022. Novak in an interview announced that Russia plans to increase its oil exports to 260 million tonnes by 2025. The agency noted that the impact on Russia's product exports following the EU (European Union) embargo and price cap will be a key factor when it comes to meeting demand growth. The report comes a day after the exporting country's organisation raised its oil demand forecast for 2023 by 100,000 bpd. OPEC revised its forecast for global economic growth this year to 2.6% as major countries showed better-than-expected economic performance.  It previously forecast an increase of 2.5%.

The producers' group expects global oil demand to rise by 2.3 million bpd this year, more than its previous estimate. Meanwhile, the International Monetary Fund raised its forecast for global economic growth this year to 2.9%, up from a previous forecast of 2.7%. Kristalina Georgieva, managing director of the International Monetary Fund, said global economic growth could reach a turning point amid falling inflation and China's recovery, adding that "while this is encouraging, the balance of risks remains tilted to the downside" and that "China's recovery could stall and inflation could remain higher than expected". The agency assures that oil demand will continue to grow in the coming years, reaching a record high.