In its latest monthly oil report, the International Energy Agency (IEA) has said that the global demand for oil in June averaged 103 million barrels per day, a new record high.
Among the factors driving the increase in demand, the IEA cites robust activity in the aviation sector this summer, developed countries seeing greater economic growth than expected, and rising Chinese demand, especially for petrochemical activities. Looking further ahead, the IEA says the world’s demand for oil will grow:
“…by 2.2 mb/d to 102.2 mb/d in 2023, with China accounting for more than 70% of growth. With the post-pandemic rebound running out of steam, and as lacklustre economic conditions, tighter efficiency standards and new electric vehicles weigh on use, growth is forecast to slow to 1 mb/d in 2024.”
Overall, the IEA sees the oil markets tightening up with crude and product inventories increasingly being drawn upon. It says that OPEC+ production dropped by 1.2 million bpd in July as Saudi Arabia’s voluntary cut took effect, although this was more than compensated for by a 1.6 million bpd rise in production from other producers. US producers like Chevron, the maker of the Texaco Meropa gear oil, are expected to account for about four-fifths of the growth in supply this year, although this is expected to decline next year.
The IEA points out that the OPEC+ group has 5.7 million bpd in spare capacity should it wish to boost output, but it notes that oil prices could increase further if it doesn’t.
