The International Energy Agency (IEA) has put on the table an upward revision of its forecasts for global oil demand this year, conditioned above all by the ‘pull’ of consumption in China after the opening due to the coronavirus. The Asian giant has recovered much faster than expected and is already reaching record levels. In its monthly report – collected by Efe – on the oil market published this Tuesday, the IEA calculates that world demand broke at 2.2 million barrels per day in 2023, which means 200,000 barrels more than what it had anticipated in April .
The average consumption of crude oil this year will be 102 million barrels per day, a historical peak that, if it is met, would be 1.3 million above the maximum reached in 2019, before the outbreak of the coronavirus crisis. The reason for this sharp rise must be found in China, which alone will account for 60% of the increase in global demand and which illustrates the escalation of activity in the Asian country.
In March, China absorbed 16 million barrels per day, a figure never reached before. In 2023 as a whole, the increase of 1.3 million barrels per day compared to 2022. In contrast, the developed countries members of the OECD have reduced their consumption in the first quarter and only a timid recovery is expected from the second . At the end of the year, their contribution to global growth will be limited to 15%.
Russia further increases its exports
On the supply side, the most relevant in the IEA report is that despite Western sanctions against Moscow, Russian oil exports will increase in April by 50,000 barrels per day to reach 8.3 million, which represents the highest level since the beginning of the invasion of Ukraine at the end of February 2022. Its authors calculate that Russia has achieved with these exports
India and China bought 80% of Russian crude, while the European Union -which was the main buyer before the war- kept 600,000 barrels per day, that is, barely 7%, and they managed to reach through oil pipelines connecting with Hungary and Slovakia and by boat to Bulgaria.
For the agency, which brings together a good part of the OECD countries, Russia is not waiting for his announcement to cut its production by 500,000 barrels per day, but is favoring the increase in volumes to compensate for the loss of income. Because if compared with those of a year ago, those revenues in April decreased by 27% and the taxes that the State collected for oil and gas sank 64% in year-on-year terms.
Beyond the Russian case, the global supply of oil fell by 230,000 barrels per day in April to 101.1 million, mainly due to the cut in exports from Iraq (due to the cutting of the oil pipeline between the Kurdistan region and Turkey), due to the impact of fires in Canada, labor protests in Nigeria and maintenance work in Brazil.
USA and Brazil, vectors of supply growth
For the year as a whole, the IEA expects world production to fall by 1.2 million barrels per day, thanks to the abundant supply of the United States and Brazil. It must be taken into account that the Organization of the Petroleum Exporting Countries (OPEC) and its partners (particularly Russia) have planned to cut their contribution by 850,000 barrels per day between April and December.
That could put pressure on the market again, as happened in mid-April, when the OPEC+ bloc’s cut announcements led to a decade-dollar rise in the price of a barrel of oil. An increase in prices that was later more than offset by the pessimistic atmosphere regarding the global economy, exacerbated by the rise in interest rates.