RIYADH: Despite economic uncertainties, global oil consumption is expected to record a year-on-year increase of 1.84 million barrels per day to 101.9 mbpd in 2023, a recent report released by Saudi Arabia’s King Abdullah Petroleum Studies and Research Center predicted.
This is a minor upward revision of 50,000 bpd from its previous forecast.
“While the US and Europe’s growth projections were revised downward, China’s growth estimates were raised due to the expectation that current turbulence would subside by the second half of this year. The net demand effect is an additional 50,000 bpd,” said KAPSARC in the report.
The advisory think tank noted that demand growth is expected to continue at a slightly higher rate of 1.91 mbpd in 2024.
KAPSARC noted that Saudi Arabia’s oil consumption is expected to grow by 80,000 bpd and 45,000 bpd in 2023 and 2024, respectively.
“We anticipate that transportation fuels will drive the growth in fuel demand, followed by heavier fuels if construction on the country’s mega projects begins. These mega projects and Saudi Arabia’s target of having 50 percent renewable and 50 percent gas-fueled electricity generation are part of Saudi Vision 2030,” added KAPSARC.
According to the report, countries in the Organization for Economic Co-operation and Development group are expected to witness a limited year-on-year oil demand growth of 300,000 bpd in 2023, while non-OECD countries could experience a 84 percent rise this year to 154,000 bpd.
The KAPSARC Oil Market Outlook indicates that OECD countries should witness an overall decline in demand growth over the first two quarters of 2023, with non-OECD countries carrying the growth.
“However, in the second half of 2023, it is expected that OECD countries will start recovering some of the lost demand, while non-OECD countries maintain modest growth in Q3 (third quarter) before declining in Q4,” added KAPSARC in the report.
It further pointed out that the present uncertainties surrounding the global economy are mainly expected to impact OECD countries in 2023, with fewer implications on non-OECD nations.
Founded in 1961, OECD has 38 member countries, including Austria, Greece, France, Norway, the US, and Canada.
The report further noted that a poll conducted by KAPSARC has found 87 percent of people believe in the possibility of a global recession in 2023, while another 87 percent opined that social unrest is probable if inflation persists.
On the supply side, KAPSARC said that global oil supply is projected to grow by approximately 1.97 mbpd in 2023, which is 710,000 bpd lower than its previous projection.
Meanwhile, the global oil supply is estimated to increase by 2.45 mbpd in 2024, 150,000 bpd higher than KAPSARC’s previous projection.
Earlier in October 2022, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, had agreed to cut output by 2 mbpd, or about 2 percent of world demand, from November until the end of 2023.
Then in a surprise move in early April, Saudi Arabia and other OPEC+ members announced further oil output cuts of around 1.2 mbpd.