OIES Oil Monthly – Issue 26
The new issue of OIES Oil Monthly, including our latest short-term oil market outlook to 2024, is now available.
– Our Brent forecast is maintained at $81.5/b in 2023 and $86.9/b in 2024, little changed from last month. Deeper OPEC+ cuts combined with softer non-OPEC supply growth in H2 will gradually overcome the -$1.1/b downwards adjustment in our Q2 price forecast. Brent is expected to break above $80/b from August onwards and remain rangebound in the $80s for the rest of the year and for most of 2024 with prices picking up again in H2 2024 as the supply/demand balance tightens, and progressively moving to the high-$80s before reaching $92.1/b in Q4.
– Following the extension of Saudi Arabia’s additional 1 mb/d cut into August and new cut pledges from Algeria and Russia for that month, we have revised the Q3 2023 deficit deeper by 290 kb/d to 1.64 mb/d, implying tighter market balances for H2 as a whole. For 2024, the global balance remains unchanged at a deficit of 0.2 mb/d as small downgrades in both supply/demand offset one another.
– Global oil demand is forecast to grow 1.9 mb/d in 2023, 270 kb/d higher than last month’s forecast and is unchanged at 1.4 mb/d in 2024. The 2023 outlook is raised on US demand growth resilience that saw a 161 kb/d uptick in H1 compared to our forecast last month, as did oil demand in several non-OECD countries which performed better than expected.
– Global oil supply is forecast to grow 1.3 mb/d in 2023, up 70 kb/d. Growth is underpinned by stronger non-OPEC actuals in H1 2023, but has been downgraded -160 kb/d to 1.5 mb/d in 2024. OPEC-10 crude growth is scaled back in both 2023 and 2024 by -120 kb/d and -130 kb/d respectively on the Saudi cut extension to the month of August and additional voluntary OPEC+ cuts. But in terms of total OPEC crude in 2023, this is offset by a 130 kb/d upgrade to Iranian production to 2.9 mb/d. Russian crude will hover close to its 9.5 mb/d target for the remainder of the year, with growth momentum outside OPEC+ easing in H2 as US shale growth begins to slow.
– We have adjusted the balance of risks lower in 2023 and 2024. The downside demand risks in the very near-term have prompted us to shift the H2 balance of risks by -$1.4/b. We have also adjusted the balance of price risks in 2024 by -$1.4/b amid firmer Russian output expectations in 2023, OPEC+ maintaining a larger spare capacity cushion and amidst ongoing macro risks and uncertainties.