Oil Market Report - September 2023

13 September 2023 •World oil demand remains on track to grow by 2.2 mb/d in 2023 to 101.8 mb/d, led by resurgent Chineseconsumption, jet fuel and petrochemical feedstocks. In 2024, naphtha and LPG/ethane, especially inChina, will dominate an overall increase of a more modest 990 kb/d, to 102.8 mb/d, reflecting below-trendGDP growth and a structural decline in road transport fuel use in major markets. •The extension of output cuts by Saudi Arabia and Russia through year-end will lock in a substantialmarket deficit through 4Q23. So far this year, OPEC+ output has fallen by 2 mb/d with overall lossestempered by sharply higher Iranian flows. Non-OPEC+ supply rose by 1.9 mb/d to a record 50.5 mb/dby August. World supply in 2023 will rise by 1.5 mb/d, with the US, Iran and Brazil top sources of growth. •Russian oil export revenues surged by $1.8 bn to $17.1 bn in August, as higher prices more than offsetlower shipments. Led by a decline in product shipments, total Russian oil exports eased by 150 kb/d lastmonth, to 7.2 mb/d, 570 kb/d below a year-ago. Shipments to China and India slumped to 3.9 mb/d from4.7 mb/d in April and May but accounted for more than half the total volumes. •Refinery margins hit an eight-month high in August as refiners struggled to keep up with oil demandgrowth, especially for middle distillates. Product cracks and margins reached near-record levels due tounplanned outages, feedstock quality issues, supply chain bottlenecks and low stocks. Global refineryruns are forecast to rise by 1.7 mb/d to 82.4 mb/d in 2023 and by 1.2 mb/d to 83.6 mb/d next year. •Global observed oil inventories plummeted by 76.3 mb to a 13-month low in August, led by a heftydecline in oil on water. Non-OECD oil stocks fell by 20.8 mb with the largest draw seen in China, whileOECD inventories eased by 3.2 mb. In July, OECD industry stocks rose by 26.7 mb to 2 814 mb butremained 102.6 mb below their five-year average. •Oil prices traded in a narrow range throughout August, with North Sea Dated hovering around $85/bbland price volatility at multi-year lows. Prices moved higher by end-month as fundamentals came to thefore once again and breached $90/bbl for the first time in 10 months after Saudi Arabia and Russiaextended voluntary production cuts until the end of 2023. Table of contents 40 years on................................................................................................................................ 3 Demand...................................................................................................................................... 4 Overview.................................................................................................................................. 4OECD ...................................................................................................................................... 5Working from home continues to undermine road fuel demand .............................................. 10Non-OECD............................................................................................................................. 12Chinese oil demand arrives home after long march ................................................................ 13 Supply...................................................................................................................................... 17 Overview................................................................................................................................ 17OPEC+ crude supply............................................................................................................. 18Russian oil export revenues extend their rise into August, boosted by stronger prices .......... 21Non-OPEC+........................................................................................................................... 24 Refining ................................................................................................................................... 28 Overview................................................................................................................................ 28Product cracks and refinery margins..................................................................................... 29Regional refining developments............................................................................................ 34 Overview................................................................................................................................ 37Implied balance ..................................................................................................................... 38Recent OECD industry stock changes.................................................................................. 40 Prices ....................................................................................................................................... 46 Overview.............