OPEC sees global oil demand growth slowing in 2023

• OPEC delegates and industry insiders say global oil demand growth will decelerate in 2023.
• Rising crude and fuel prices will act as a drag on the global economy, they claim.
• OPEC is expected to release its first demand prediction for 2023 in its monthly report in July.

According to OPEC delegates and industry insiders, global oil demand growth will decelerate in 2023, as rising crude and fuel prices help push up inflation and act as a drag on the global economy.

Fuel consumption has recovered from the pandemic-induced collapse of 2020, and is expected to surpass 2019 levels this year, despite record-high costs. High prices, on the other hand, have slashed growth forecasts for 2022 and fueled prospects for slower growth in 2023.

In July, the Organization of Petroleum Exporting Countries is anticipated to provide its initial demand prediction for 2023. Its projection, along with that of the International Energy Agency in Paris, will be keenly scrutinised for clues as to how OPEC’s supply policy might evolve.

An OPEC delegate and another source acquainted with the organization’s thinking said they expected world demand to climb by no more than 2 million barrels per day (bpd) in 2023, a mere 2% increase over the 3.36 million bpd expected in 2022.

“Even if it’s only 1 million bpd, that’s still growth, not a peak,” the delegate added of next year’s prospects.

According to an OPEC insider, OPEC will release its first demand prediction for 2023 in its monthly report on July 12.

According to an IEA spokesperson, the International Energy Agency, which advises Western nations on energy policy, will release its first 2023 demand prediction in a monthly report on Wednesday.

OPEC is keeping an eye out for indicators that high fuel prices will continue.

Two more OPEC delegates predicted that demand destruction will have a negative impact on oil consumption in the coming months, though one of them said there was no evidence of this in the United States yet, citing recent gasoline demand figures.

A senior industry source at a trading firm who is not linked with the IEA or OPEC also predicted reduced demand growth in 2023, estimating that demand will climb by 2 million bpd or less, down from 2.6 million bpd in 2022.

“At $120 a barrel, crude is destroying demand,” he claimed. “It’s already taking place.”

Given changes in the economic outlook and geopolitical uncertainty, such as Russia’s invasion of Ukraine and recent Chinese coronavirus lockdowns, oil demand analysts are frequently forced to make significant modifications.

In its first prediction, issued in July 2021, OPEC predicted demand growth of 3.28 million bpd in 2022, eventually rising it to more than 4 million bpd before lowering it to 3.36 million bpd.