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The U.S. Energy Information Administration (EIA) has raised its global oil demand forecast for 2023 to a record 103.1 million barrels per day (bpd), while lowering its supply growth estimate to 102.2 million bpd. The supply deficit, driven by delayed OPEC+ output increases, is expected to push Brent crude prices above $80 per barrel this month. Despite recent price drops below $70 due to economic concerns, particularly in China, the EIA predicts a recovery as global demand continues to outpace supply. OPEC+ has delayed its production boost until December, further tightening the market and leading to increased withdrawals from global stockpiles, supporting higher prices.

Key Highlights

# EIA projects global oil demand to hit a record high of 103.1 million barrels per day in 2023.

# Global oil supply forecast lowered to 102.2 million bpd due to delayed OPEC output increases.

# Brent crude prices expected to rise above $80 per barrel this month, driven by supply deficits.

# OPEC+ delays production boost until December amid economic concerns and falling oil prices.

# Global demand is forecast to outpace output by 0.9 million bpd, pushing market tightness.

Global oil demand is set to reach new heights in 2023, with the U.S. Energy Information Administration (EIA) forecasting a rise to 103.1 million barrels per day (bpd), exceeding previous estimates. This increase in demand is accompanied by a reduced supply growth forecast, with output expected to reach only 102.2 million bpd, down from the previous forecast of 102.4 million bpd. The EIA attributes this supply shortfall to the Organization of the Petroleum Exporting Countries (OPEC) postponing its plan to increase output until December, further tightening the market.

Brent crude prices, which averaged $73 per barrel in early September, are projected to recover and surpass $80 in the physical spot market this month. Despite economic concerns, particularly in China, and declining prices, the EIA expects the ongoing supply deficit to support a price rebound. OPEC+, the alliance of oil-producing nations, has curtailed production, leading to a scenario where global consumption outpaces supply, creating upward pressure on prices.

OPEC+ recently reduced its demand growth forecasts to 2 million bpd for the year, a figure still above the EIA’s estimate of 1 million bpd growth. While oil prices briefly dipped below $70 for the first time since 2021, the EIA's report suggests that market fundamentals will drive a recovery as stockpiles dwindle and consumption remains strong.

Finally

The combination of rising demand and delayed supply increases is set to push Brent crude prices above $80, with market tightness persisting throughout the year.

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