EIA, OPEC revise down world oil demand growth for 2023

The Organization of the Petroleum Exporting Countries (OPEC) and the United States Energy Information Administration (EIA) cut their respective oil demand projections for 2023.

The EIA stated that its projection for global oil demand in 2023 has been reduced by 500,000 barrels per day from the previous forecast to 101 million bpd, according to its Short-Term Energy Outlook (STEO) report for October released on Wednesday (Oct. 12).

Similarly, the estimate for 2023 global oil production was cut by 600,000 bpd to 100.7 million bpd and takes into account the latest decision by OPEC and its allies, known as OPEC+ to lower output across the alliance.

Last week OPEC+, agreed a 2mn b/d crude quota cut in response to a deteriorating economic outlook. The United States criticized the decision. 

The EIA’s oil production forecast for 2023 now stands at 12.4 million bpd compared to 12.6 million bpd from the September STEO and the country’s gasoline consumption estimate was revised down by 100,000 bpd.

“The massive cut in OPEC+ oil supply increases energy security risks worldwide. Even taking into account lower demand expectations, it will sharply reduce a much needed build in oil stocks through the rest of this year and into the first half of 2023,” the IEA stated.

Citing “the extension of China’s zero-Covid-19 restrictions in some regions, economic challenges in OECD Europe, and inflationary pressures in other key economies” as factors behind the 2022 revision OPEC stated on Wednesday that the world oil demand growth this year is projected to average 99.7 million barrels per day (bpd), up 2.6 million bpd from 2021. The estimate in its latest monthly report is 0.5 million bpd lower than predicted in September.

For 2023, global oil demand growth is also revised down to stand at 2.3 million bpd from 2.7 million bpd in September.

“The world economy has entered into a time of heightened uncertainty and rising challenges, amid ongoing high inflation levels, monetary tightening by major central banks, high sovereign debt levels in many regions as well as ongoing supply issues,” OPEC said in the report.

OPEC also cut its 2022 world economic growth forecast to 2.7% from 3.1%, trimmed next year’s figure to 2.5% and said there was potential for further weakness.