The IEA today upgraded its forecasts for oil supply and demand by 200,000 b/d each for 2023, leaving its overall projected balances unchanged for the year. It said China will "resume its established role as the primary engine of world oil demand growth" this year, while anticipating jet fuel use recovering to around 90pc of pre-Covid-19 pandemic 2019 levels.
Its monthly Oil Market Report (OMR) anticipates Chinese demand growing by 900,000 b/d from a year earlier, accounting for 45pc of the overall rise. It puts global demand at 101.9mn b/d this year from 100mn b/d in 2022.
It said the impact of the EU embargo and G7-led price caps on Russian oil product exports will be a key factor in meeting demand growth, as will Beijing's policy on refining activity and product exports.
On the latter, the IEA said it will take several months to fully remove the strict Covid-19 lockdown measures, anticipating that some reimposition of restrictions may be required during the reopening process. On Russia, it noted exports in January of 8.2mn b/d, near an all-time high, and said "if the price cap on products is half as successful as the crude cap, product markets may well weather the storm. But more crude supplies would be required to prevent renewed stock draws later in the year". It forecasts Russian production in 2023 at 10mn b/d, down by 1.1mn b/d from 2022.
The IEA forecasts world liquids supply at 101.3mn b/d in 2023, up from 100.1mn b/d in 2022. This growth is driven by producing nations outside the Opec+ alliance, most notably the US, Brazil, Norway, Canada and Guyana — all of which should produce at record levels.
The IEA sees global production outpacing demand in the current quarter and matching it in the April-June period. But then, as in its previous OMR, it sees a shift in the balance leading to a notable shortfall in availability by the end of 2023. Within that there are some differences from the previous report. It sees supply exceeding demand more comfortably in the short term, projecting smaller deficits in the third and fourth quarters.
The IEA said global stocks fell by nearly 70mn bl in December, partly reversing a revised stockbuild of more than 100mn bl the previous month. Its preliminary data for January show a stockbuild of around 28mn bl, with middle distillates storage filling in Europe ahead of the 5 February ban on Russian imports.
