The Organization of Petroleum Exporting Countries (OPEC) reported that global oil demand for 2023 remained stable for the third month in a row.
According to the producer group’s report, global oil demand will rise by 2.33 million barrels per day (bpd) or 2.3 percent in 2023. This was almost exactly the same as the 2.32 million barrels per day forecast last month.
The potential Chinese growth that provided the support, according to OPEC, would be offset by downside economic risks elsewhere, such as the US debt ceiling.
Minor upward adjustments were made due to the better-than-expected performance in China’s economy, while other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand, OPEC said in the report.
OPEC expects Chinese oil demand to rise by 800,000 barrels per day, up from 760,000 barrels per day forecast last month, adding to a recovery following the repeal of strict COVID-19 containment measures.
However, global growth remained unchanged for the third month in a row, and OPEC maintained its 2023 economic growth forecast at 2.6 percent, citing potential downside risks such as inflation and increased debt payments from higher interest rates.
“Moreover, the US debt ceiling issue has yet to be resolved, which could have economic consequences,” OPEC said in its economic commentary.
A new round of oil output cuts announced on April 2 by members of OPEC+, which includes OPEC, Russia, and other allies, has failed to lift oil prices, which have been hit by further interest rate hikes and concerns about the US debt ceiling.
This is the final monthly OPEC report before the next OPEC+ policy meeting on June 4.
According to the report, OPEC’s oil production fell in April, owing to the impact of earlier output cuts pledged by OPEC+ to support the market, as well as some unplanned outages.
With prices falling, OPEC+ agreed to a 2 million barrels per day reduction in output for November last year, the largest since the early days of the COVID-19 pandemic in 2020. The voluntary cuts implemented on April 2 add to this total.
OPEC reported a 191,000 barrel per day drop in April output to 28.60 million barrels per day, with declines in Iraq and Nigeria.
Northern Iraqi exports were halted, while some Nigerian exports were hampered by a labor dispute involving ExxonMobil employees.
The report maintained its forecast that non-OPEC supply would increase by 1.4 million barrels per day in 2023, but it also highlighted factors that could limit or curtail supply, such as investment levels and the Ukraine war.
While non-OPEC supply investment in 2023 is expected to be slightly higher than before the pandemic, it will fall short of the $747 billion high reached in 2014 as oil companies focus on capital discipline, according to OPEC.
