Oil market, in 2023 increased demand up to 1.9 million barrels per day. But supply will decrease

The new IEA report on oil market trends in 2023 speaks for itself. After a decrease in 2022, demand will increase again in 2023, at a sustained pace, reaching almost 2 million barrels a day. But the offer may not be enough, settling at 1 million barrels a day.

Oil market: prospects for 2023

According to the report’s outlook, global demand for oil will increase during 2023, to 1.9 million barrels per day. Aviation fuel will remain the main source of growth, with an increase of 840 thousand barrels per day.

During 2022 the demand for oil had fallen, especially in the last quarter, in which supply exceeded demand by more than 1 mb/g, despite the cut in production targets and the interruptions in US supply due to winter storms.

However, the mild climate, combined even with weak industrial activity, has significantly reduced the use of oil in Europe. Much of the excess oil seems to have ended up in emerging markets, including China, but mostly on offshore oil tankers. In fact, oil on water has increased by 181 mb because the oil tankers, due to the reallocation of Russian flows, have to travel significantly longer distances.

In the first half of 2023, according to the IEA, there will be a recovery in demand. On the other hand, however, world oil supply in 2023 is expected to slow to 1 mb/d. The United States will be the main source of oil along with Canada, Brazil and Guyana.

Russia and China: the wildcard states in the oil market

The two "jolly states" in the prospects of the oil market will be Russia and China. China will probably be in the lead in terms of oil supply, although, specifies the report,

delivery times remain uncertain. In fact, Russian oil exports have also decreased as a result of the Russian-Ukrainian war and Western sanctions on Russian oil with diesel among the most endangered products.

In December 2022, Russia exported 1.2 mb/d of diesel, of which 60% went to the EU. During 2023, according to the IEA, the Middle East and China will provide relief in this regard. The report specifies that these two countries will supply a significant amount of diesel.