Oil Market Report - June 2023

14June2023 Worldoildemandwillgrowby2.4mb/din2023to102.3mb/d,anewrecord.China’sreboundcontinuesunabated,withitsoildemandreachinganall-timehighof16.3mb/dinApril.Thenon-OECDaccountsfor90%ofgainsthisyear,asOECDdemandremainslacklustreamidthecurrentmanufacturingslump.Anincreasinglyadversemacroeconomicclimatewillactasaheadwindin2024,andasthepost-pandemicrecoverywilllargelyhaverunitscourse,oildemandgrowthissettoslowto860kb/d. Non-OPEC+leadsworldsupplygrowththroughnextyear,adding1.9mb/din2023and1.2mb/din2024.AsforOPEC+,totaloiloutputin2024issettodeclineby200kb/dasproductioncurbsarecarriedthroughtheyear.Totaloilsupplyisforecasttoreachrecordhighlevelsof101.3mb/dthisyearand 102.3mb/dnextyear.InMay,worldoilsupplyfellby660kb/dto100.6mb/dafterextracutsfromsomeOPEC+producerskickedin.SaudiArabiahaspromisedtocurboutputbyafurther1mb/dinJuly. Russianoilexportsdroppedby260kb/dinMayto7.8mb/d,largelyunchangedfromayearago.Crudeoilexportsroseby90kb/dto5.2mb/dwhileproductexportsslumpedby350kb/dto2.6mb/d.ChinaandIndiaaccountedforatleast56%oftotalRussianexports,whileshipmentstoAfrica,theMiddleEastandLatinAmericamadeupanother12%.Estimatedexportrevenuesfellby$1.4bnto$13.3bn,down36%onayearago,withaveragecrudepriceseasingfrom$60/bblinAprilto$55/bblinMay. Globalrefinerythroughputsareforecasttoincreaseby1.8mb/din2023and1mb/dnextyearwhenitaverages83.4mb/d.AfurtherdeclineinOECDcruderunsnextyearismorethanoffsetbythe1.3mb/dincreaseinnon-OECDactivity.NewcapacityinOmanandKuwaitandampleavailabilityofdiscountedRussiancrudeinAsiaskewsactivityawayfromtheAtlanticBasin.RefinerymarginswerestableinMay,withgainsinAtlanticBasinlightdistillatespartiallyoffsetbyweakermiddledistillates. Globalobservedoilinventoriesroseby10mbinAprilasa15.9mbdeclineinoilonwateranda1.1mbdropinnon-OECDstockspartlyoffseta27mbbuildinOECDstocks.OECDindustrystocksroseby 33.6mbbutwerestill86.4mblowerthanthefive-yearaverage.PreliminaryMaydatashowafurtherstockbuildinOECDcountriesof21.1mb. . d ver sere st hgril Al EA.I NorthSeaDatedfellbyaround10%inMaycomparedwithAprilamidgrowingconcernsabouttheimpactofhawkishcentralbankpoliciesontheglobaleconomy.Attestingtooil’sbearmarket,thecurrentICEBrentfuturepriceofaround$73/bblis$50/bblbelowsummer2022’speak.SaudiArabia’sannouncementofdeeperoutputcutsinearlyJunewasunabletostemthedecline. IEA.Allrightsreserved. Tableofcontents Mixedsignals3 Demand4 Supply7 Refining9 Stocks11 Prices14 Tables20 NotetoSubscribers: Thismonth’sReportisabbreviated,aswearesimultaneouslypublishingourannualmedium-termoutlook,Oil2023–AnalysisandForecastto2028.Thefollowingoverviewfocusesontheshort-termforecastthathasbeenextendedtoinclude2024balances. TheusualOMRformat,withwrittenanalysis,willresumeforthe13Julyedition. Mixedsignals Oilmarketsarestrugglingfordirectionasconflictingdatapointscloudtheoutlook.Bearishmacroeconomicindicatorsandconcernsoverdemandgrowthareclashingwithresurgentoiluseinkeyconsumingcountries.Oilpricesappeartobetakingtheircuefromtheformer,withbenchmarkNorthSeaDatedtradingat$73/bbl-nearlyhalfthehighof2022-despitealoomingsupplydeficit. Globaloildemandcontinuestodefythechallengingmacroeconomicclimateandissettoriseby 2.4mb/din2023,outpacinglastyear’s 2.3mb/dincreaseaswellasearlierexpectations.Chinaaccountsfor60%ofthegains,withsoaringtransportandpetrochemicalusepropellingapparentdemandinApriltoanall-timehighof 16.3mb/d.IndiandemandisequallyrobustwiththelatestreadingsforMayshowingbothgasolineanddieselbreakingrecords. Bycontrast,OECDdemandremainslacklustreamidanongoingmanufacturingslumpandgenerallysubduedeconomicgrowth.Havingspent4Q22and1Q23in mb/d105 100 95 90 85 1Q223Q221Q233Q231Q243 StockCh.&Misc(RHS)Demand *AssumesOPEC+targetsandvoluntarycutsinplacethrough2024. contraction,theOECDreturnstomutedgrowthin2Q23,withtheUSdrivingseasongettingofftoastrongstart.Inadvancedanddevelopingeconomiesalike,reboundingairtrafficisconsolidatingjet/kerosene’spositionasthemaincontributortoglobal2023demandgains(1.1mb/d). Whileoildemandisexpectedtocontinuetorise,bothseasonallyandstructurallyovertheremainderoftheyear,onlyamarginalincreaseinsupplyisforeseen.InMay,worldoilproductionfellby660kb/dto100.6mb/d.DeepercutsfromsomeOPEC+producerskickedinwhileoutputfromIraq’snorthernKurdishregionandsomeCanadianoilsandsremainedshutin.SaudiArabia,withitsvoluntarycutof500kb/dagreedinApril,ledthemonthlydropinworldsupply,buttheoveralldeclinewasstemmedbyaseasonal330kb/driseinbiofuelsalongwithhigherflowsfromNigeriaandelsewhere.TheKingdomhaspromisedtoslashoutputbyafurther1mb/dinJulytoatwo-yearlowof9mb/d.Riyadhmadethepledgeatthe4JuneOPEC+meetingthatrolledoverthebloc’sexistingcurbsthrough2024andreadjustedsometargetstobetterreflectactualsupply. Withthepost-Covidreboundhavinglargelyrunitscourse,globaldemandgrowthissettodecelerateto860kb/dnextyear.Theimpactoftheunprecedentedmonetarypolicytighteningcanfurthercurtailactivityandlimitadvancedeconomiestoasecondyearofsubpargrowthin2024.Combinedwithimprovedvehicleefficienciesandwidespreadteleworking,thiswillpushOECDdeliveriesintodecline.Conversely,non