Automotive Exports September 2023

IEA flags risk of higher oil prices, cuts
2024 demand view
The International Energy Agency (IEA) said
OPEC+ supply cuts could erode inventories
in the rest of this year, potentially driving
prices even higher, before economic
headwinds limit global demand growth in
2024.
Tighter supply driven by OPEC+ oil
output cuts and rising global demand has
underpinned a rally in oil prices, with Brent
crude hitting highs of over $88 a barrel, the
highest since January.
The IEA said if OPEC+ current targets are
maintained, oil inventories could draw by
2.2 million barrels per day (bpd) in the third
quarter and 1.2 million bpd in the fourth,
“with a risk of driving prices still higher”.
“Deepening OPEC+ supply cuts have
collided with improved macroeconomic
sentiment and all-time high world oil
demand,” the Paris-based energy watchdog
said in its monthly oil market report.
The Organization of the Petroleum
Exporting Countries (OPEC) and its allies,
together known as OPEC+, began limiting
supplies in late 2022 to bolster the market
and in June extended supply curbs into
2024.
The IEA said that in July, global oil supply
plunged by 910,000 bpd in part due to
a sharp reduction in Saudi output. But
Russian oil exports held steady at around
7.3 million bpd in July, the IEA said.
Next year, demand growth is forecast
to slow sharply to 1 million bpd, the IEA
said, citing lackluster macroeconomic
conditions, a post-pandemic recovery
running out of steam and the burgeoning
use of electric vehicles.
“With the post-pandemic rebound largely
completed and as multiple headwinds
challenge the OECD’s outlook, oil
consumption gains slow markedly,” the IEA
said, referring to Organisation for Economic
Co-operation and Development nations.
The IEA’s demand growth forecast is down
by 150,000 bpd and contrasts with that of
OPEC, which maintained its forecast that oil
demand will rise by a much stronger 2.25
million bpd in 2024.
“The global economic outlook remains
challenging in the face of soaring interest
rates and tighter bank credit, squeezing
businesses that are already having to cope
with sluggish manufacturing and trade,”
the IEA said. For 2023, the IEA and OPEC
are less far apart. The IEA expects demand
to expand by 2.2 million bpd in 2023,
buoyed by summer air travel, increased
oil use in power generation and surging
Chinese petrochemical activity. OPEC sees a
rise of 2.44 million bpd.
Demand is forecast to average 102.2 million
bpd this year, the IEA said, with China
accounting for more than 70% of growth,
despite concerns about the economic
health of the world’s top oil importer.
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