Global Growth Could Shatter Oil Demand Concerns Through 2023

Global economic growth is expected to continue strong at 3.1% this year and another 3.1% in 2023 according to OPEC’s forecast, on Tuesday, suggesting that the group expects healthy oil demand growth despite market fears of recession.

In its September Monthly Oil Market Report (MOMR) published today, OPEC made no changes in its economic growth estimates and sounded an upbeat note about the trend of the global economy for 2022 and 2023.

Looking at 2023, the cartel noted that “Despite the obvious downside risks, there is also upside potential to the global economic growth forecast. Fiscal measures in the EU and China support growth towards the end of the year and lead to the potential continuation of a stable dynamic in 2023.”

As a result of the expected robust economic growth, oil demand will continue to rise, especially driven by the recovery in travel and transportation, OPEC said. This is forecast to lead to robust overall growth in oil demand of 3.1 million barrels per day (bpd) in 2022 and 2.7 million bpd in 2023, surpassing the pre-COVID-19 levels, to stand at an average 102.7 million bpd next year.

The cartel expects the global economy to grow by 3.1% both this year and next, and although it revised down its estimate of the Eurozone economy, OPEC still sees 3.1% growth in 2022 and 1.7% increase in the eurozone in 2023.

That is contrary to recent forecasts from analysts and economists who expect the Eurozone and several EU member states to be plunged into recessions as early as this year due to soaring energy prices weighing on inflation, industries, and consumer sentiment.

OPEC raised its August oil production by 618,000 bpd, according to the group’s Monthly Oil Market Report published on September 13. OPEC also raised its production to 29.651 million bpd, with the largest increases coming from Libya and Saudi Arabia.

Libya’s oil production has been severely depressed in recent months, but for now, production has climbed back above 1 million bpd, to 1.123 million bpd, compared to 697,000 in July. Libya’s average crude oil production for 2021 was 1.143 million bpd.

Saudi Arabia lifted production as well, to 10.904 million bpd in August compared to 10.744 million bpd. This is 100,000 bpd lower than the 11.004 million bpd laid out in its August quota.

The largest laggards to the production cut deal for the month of August are Nigeria (1.1 million bpd produced versus a 1.826 million bpd target) and Angola, which produced 1.187 million bpd versus its 1.525 million bpd target. Iraq also underproduced in August by 126,000 bpd.