However, this growth is overshadowed by a weakening macroeconomic climate, particularly in Europe, leading to a 400 kb/d downward revision in 4Q23 demand.
The slowdown is expected to persist into 2024, with global gains halving to 1.1 mb/d.
Contributing factors, according to the International Energy Agency report for December 2023, include efficiency improvements and the increasing prevalence of electric vehicles.
In the latest report obtained by PUNCH Online on Thursday, the IEA noted that the US oil supply also defies expectations by surpassing 20 million barrels per day.
This, the report further indicates is contrary to expectations, “the United States has shattered records by exceeding 20 mb/d in oil output. Coupled with record production from Brazil, and Guyana, and surging Iranian flows, global oil output is set to increase by 1.8 mb/d to 101.9 mb/d in 2023. Non-OPEC+ is projected to drive further gains in 2024, with OPEC+ deepening its voluntary oil cuts.
“Russian crude export prices saw a sharp decline in November, with the Urals falling below the $60/bbl price cap. This, combined with a drop in oil shipments, resulted in a 17% month-on-month decrease in export revenues to $15.2 billion. Crude revenues were more significantly affected than product revenues.
“Refinery margins in Europe and Singapore rebounded marginally in November, while the US Gulf Coast experienced a third consecutive month of decline. Weaker diesel and gasoline cracks were responsible for the decline in the US hub. Global crude runs in 4Q23 are expected to be weaker than previously estimated due to extended refinery turnarounds.
The IEA report for December further indicates that bearish sentiments continue to prevail as the OPEC+ oil cut failed to boost oil prices, “Oil market sentiment turned bearish in November and early December due to non-OPEC+ supply strength and slowing global oil demand growth.
“Despite OPEC+ extending output cuts through 1Q24, oil prices continued to tumble, reaching their lowest levels in six months. Brent futures were trading around $74/bbl, and WTI was close to $69/bbl at the time of writing.
“ICE Brent futures fell in November, declining to $83/bbl, influenced by surging US crude exports and weaker global demand growth. The bearish trend continued into early December after the OPEC+ meeting on November 30 failed to halt the price rout. Brent prices were approximately $25/bbl below September’s annual high.
“Global observed oil inventories declined by 19.6 mb in October, with oil product stocks falling for the first time in four months. However, OECD and non-OECD on-land stocks showed differing trends, falling by 18.9 mb and 24.2 mb, respectively, while oil on water increased by 23.5 Mb.
“Evidence of a slowdown in oil demand is mounting, with the pace of expansion expected to ease from 2.8 mb/d year-on-year in 3Q23 to 1.9 mb/d in 4Q23. A deteriorating macroeconomic outlook led to a downward revision of nearly 400 kb/d in the global oil consumption growth forecast for the final three months of the year. Europe, Russia, and the Middle East are particularly affected.
The United States, along with Brazil and Guyana, achieved a record-breaking oil supply, exceeding 20 mb/d in September. OPEC+ experienced a decline, cutting its market share to 51% in 2023 – the lowest since its creation in 2016. Upward revisions to US 2H23 supply are set to total close to 600 kb/d, leading to a 1.4 mb/d increase in 2023.
The shift in global oil supply from the Middle East to the United States and other Atlantic Basin countries, coupled with the dominant impact of China and its booming petrochemical sector on oil demand, is profoundly impacting global oil trade. Key producers now face challenges in defending their market share and maintaining elevated oil prices amidst rising output and slowing demand growth.”, the IEA report stated.
