OPEC is still forecasting robust oil demand growth of 3.1 million b/d for 2022 and a further 2.7 million b/d in 2023, despite concerns of a recession, buoyed by "still-solid" economic performance in many countries and expected feedstock switching in power generation from gas to liquid fuels.
Global oil demand will be 102.73 million b/d in 2023 vs 102.72 million b/d forecast last month, the group said Sept. 13 in its monthly market report. Oil traders had been concerned about weakening economic indicators, with Dated Brent falling 29% since June 14 to $93.21/b as of Sept. 12, according to assessments by Platts, part of S&P Global Commodity Insights.
"Oil demand in 2023 is expected to be supported by a still-solid economic performance in major consuming countries, as well as potential improvements in COVID-19 restrictions and reduced geopolitical uncertainties," OPEC said in the report.
The forecast for 3.1% global economic growth in 2023 includes fiscal measures in the EU and China, supporting growth toward the end of the year, it said. "This fiscal support may at least counter-balance the anticipated downward momentum that some market observers forecast."
The 2022 oil demand growth was also kept unchanged at 3.1 million b/d, which includes additional oil demand growth due to fuel switching in power generation, OPEC said. Russia's invasion of Ukraine has caused natural gas prices to soar, with some buyers deciding to switch to crude oil even though crude is also more costly since the war started in February.
OPEC and its allies actually decided to trim output quotas by 100,000 b/d for October at their latest meeting. Ministers are scheduled to convene again Oct. 5 on November production.
In the OPEC report, Saudi Arabia, the world's largest oil exporter, self-reported its production was 11.05 million b/d vs 10.815 million b/d in July. The UAE also reported an increase in production, to 3.184 million b/d for August from 3.133 million b/d for July. Saudi Arabia and UAE are considered the leading producers with spare capacity to increase output if needed.
Overall, OPEC production for August was 29.651 million b/d compared with 29.033 million b/d in July, according to secondary sources used by OPEC.
Non-OPEC liquids supply growth will be 2.1 million b/d this year and 1.73 million b/d in 2023, up from 1.71 million b/d estimated last month. The main drivers for growth next year expected to be the US, Norway, Brazil, Canada and Guyana. Oil production declines for 2023 are projected mainly in Russia and Azerbaijan, OPEC said.