LONDON: Global oil demand growth will slow next year but will still be at a robust 1.7% as China recovers from COVID-related economic doldrums, the International Energy Agency (IEA) said on Wednesday.
This year China is still headed for a contraction in oil demand of 400,000 barrels per day (bpd) to 15.4 million bpd, the IEA added, before recovering by almost one million bpd in 2023.
Russia’s oil output will fall by 1.4 million barrels per day (bpd) next year the IEA predicted, further tightening balances as a Dec. 5 price cap imposed by the G7, the European Union and Australia takes effect seeking to curb Moscow’s wartime revenue.
Russia’s output rose by 90,000 bpd in November to 11.2 million bpd, just 200,000 bpd below levels seen before Moscow sent troops into Ukraine.
Its output has consistently outstripped IEA predictions though lower global prices and steeper discounts on Russian oil meant Moscow’s revenue fell by $700 million to $15.8 billion, the IEA said.
“While lower oil prices come as a welcome relief to consumers faced by surging inflation, the full impact of embargoes on Russian crude and product supplies remains to be seen,” the IEA said.
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Global economic challenges and concerns over demand in top oil importer China have helped erase most oil price gains this year, but the IEA said demand in some areas was surprisingly robust.
China, India and the Middle East picked up some of the slack left by flagging oil uptake in Europe and elsewhere in East Asia, the IEA said.
The data prompted the IEA to raise its estimate for oil demand growth this year by 140,000 bpd to 2.3 million bpd and for next year by 100,000 bpd to 1.7 million bpd for a total of 101.6 million bpd.
“While restriction levels in (China) remain high, the stage is now set for a progressive reopening in 2023. We have raised our estimates for 2022 and next year’s growth by 50,000 bpd and 40,000 bpd, respectively.”
“As we move through the winter months and towards a tighter oil balance in Q2 2023, another price rally cannot be ruled out,” the IEA said.