Oil production cuts that Saudi Arabia and Russia extended to the end of 2023 will create a “significant supply shortfall” and threaten a renewed surge in price volatility, the International Energy Agency (IEA) warned. “From September onwards, the loss of OPEC+ production... will drive a significant supply shortfall through the fourth quarter,” IEA said in its monthly oil report. Global oil markets face a deficit of 1.2 million barrels a day (bpd) during the second half of 2023. Even if the two producers were to relax their curbs in early 2024, oil inventories will be severely depleted, leaving prices vulnerable to shocks, IEA said.
When it comes to demand, IEA called China “the main wild card.” It noted: “Any abrupt weakening of China’s industrial activity and oil demand is likely to spill over globally, making for a more challenging climate for emerging markets in Asia, Africa and Latin America.”
IEA estimates 2023 global demand will grow by 2.2 million barrels per day (bpd) to an all-time annual high of 101.8 million bpd. China, despite its economic struggles, will account for 75% of the growth. The increase in world consumption will decelerate considerably in 2024 to 990,000 bpd, in tandem with weaker global economic expansion and a fading reliance on oil as a transport fuel, IEA said.
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