The world’s oil demand is set to rise by 2.2 million barrels per day (bpd) this year to a record 102 million bpd, the International Energy Agency (IEA) said on Tuesday, revising up its forecast by 200,000 bpd as China’s demand hit a record.
The Chinese recovery continues to exceed expectations, the agency said in its Oil Market Report today, noting that China set an all-time record for its oil consumption in March 2023 at 16 million bpd.
In last month’s report, the IEA also expected the world to see record demand for oil this year but pegged the growth at 2 million bpd in 2023 compared to last year.
Demand in the developed economies in the OECD, which was weak in the first quarter of this year, is expected to return to growth this quarter, and demand growth in OECD is set to average 350,000 bpd this year. But this small increase “pales in comparison” with an expected growth of 1.9 million bpd in non-OECD oil demand, the IEA said.
The current pessimistic mood on the market, due to macroeconomic concerns, clashes with expectations of a tight market later this year, when demand is set to outstrip supply by almost 2 million bpd, the agency added.
Global observed oil inventories declined in March, also setting the stage for a tighter market later in 2023. Per IEA estimates, those inventories fell by 7.9 million barrels in March as a surge in oil on water and a slight increase in non-OECD stocks failed to offset a massive decline of 56 million barrels in the OECD.
“Led by a sharp draw in products, OECD industry stocks fell to a six-month low of 2 753 mb to 89 mb below their five-year average,” the IEA said.
Supply issues have compounded in recent weeks, with the halt of oil exports from Kurdistan, outages in Nigeria, and wildfires shutting in part of Canadian output. These would add to the new OPEC+ oil production cuts, which began this month and will continue until December.