Oil demand globally has reached historically high levels, with the month of June already hitting the record of 103 mb/d, said the International Energy Agency (IEA) in its latest report for August.
IEA expects that the oil output globally will surge by 2.2 mb/d to 102.2 mb/d in 2023, citing China as the biggest contributor to this growth – 70%.
Industry experts, however, warn that oil prices could jump even higher in the months that follow, with the continuous supply cuts from producers, like Saudi Arabia, Forbes reported.
“At 50.7 mb/d, the bloc’s production was down more than 2 mb/d from the start of the year. Over the same period, producers outside the group ramped up output by 1.6 mb/d to 50.2 mb/d but limited non-OPEC+ gains are expected for the remainder of the year,” IEA said in its report.
Riyadh’s extension for voluntary production cuts comes as a support for the oil and gas market, and the decision was welcomed by OPEC+ member Libya, with its oil minister saying the cuts will positively “impact market balance between global producers, consumers, and on the global economy.”
Furthermore, OANDA analyst Craig Erlam told Reuters that oil investors are becoming more optimistic about the market as the production cuts seem to improve the economic outlook.
According to projections from the IEA, refinery throughputs are expected to achieve a summer peak of 83.9 million barrels per day (bpd) in August of this year. This marks a rise of 2.4 million bpd since May and a significant increase of 2.6 million bpd compared to the same time last year.
“The increase in refined product output has failed to ease product market tightness, pushing gasoline and middle distillate cracks to near record highs. High sulfur fuel oil cracks provided further support to margins, which pushed above 2022 levels in July,” the IEA said.
