What Will World Oil Demand Be in 2023?

Where will oil demand land this year? It depends on who you ask.

The International Energy Agency (IEA), for example, revealed in its latest Oil Market Report (OMR), which was released this month, that it now projects world oil demand to rise by 2.2 million barrels per day year on year to average 102 million barrels per day. The IEA’s April OMR saw world oil demand climbing by two million barrels per day to “a record 101.9 million barrels per day”.

“Our forecast for world oil demand growth for 2023 has been revised up to 2.2 million barrels per day in this report, with China’s rebound even stronger than previously expected,” the IEA noted in its May OMR.

“The world’s second biggest oil user after the U.S. will account for nearly 60 percent of global growth in 2023. Record demand in China, India, and the Middle East at the start of the year more than offset lackluster industrial activity and oil use in the OECD,” the IEA added.

“The latter accounts for just 15 percent of growth this year, supported by consumer spending and personal mobility,” the IEA continued.

According to the U.S. Energy Information Administration’s (EIA) latest short term energy outlook (STEO), which was also released this month, total world consumption will average 100.99 million barrels per day in 2023. Broken down quarterly, the EIA’s May STEO sees this consumption coming in at 100.82 million barrels per day in the second quarter of this year, 101.58 million barrels per day in the third quarter, and 101.67 million barrels per day in the fourth quarter.

The EIA’s previous STEO, which was released in April, projected that total world demand would be 100.87 million barrels per day in 2023.

“Although demand growth for liquid fuels faces downside risks through the end of 2024, we expect the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months,” the EIA noted in its May STEO.

“Global liquid fuels consumption in our forecast increases by 1.6 million barrels per day in 2023 and by 1.7 million barrels per day in 2024, and most expected liquid fuels demand growth is in non-OECD Asia, led by China and India,” the EIA added.

“We expect this demand growth will bring the global oil market into balance between the third quarter of 2023 and 1Q24 and push the Brent price from current levels back to between $75 per barrel and $80 per barrel,” the EIA continued.

In a report sent to Rigzone last week, Standard Chartered revealed that it sees global oil demand averaging 100.94 million barrels per day this year. The figure marks a 156,000 barrel per day increase from last month, the report highlighted.

In its latest report, Standard Chartered forecasts that demand will come in at 100.47 million barrels per day in the second quarter of this year, 101.92 million barrels per day in the third quarter, and 101.78 million barrels per day in the fourth quarter.

“There appears to be a disconnect between what energy economists are seeing in the data and what speculative traders are acting on,” Standard Chartered analysts noted in the report.

“We think this disconnect is the result of the increasingly top-down and macro-led nature of oil-market sentiment - we find that most traders have become more pessimistic about demand over the past three months,” the analysts added.

To contact the author, email andreas.exarheas@rigzone.com