Global Oil Market Supply & Demand Outlook For 2023
We just finished compiling the global oil supply & demand forecast for 2023. And there are important points we will discuss in this update along with your access to excel at the end of this article.
For starters, here's the summary page of everything we see for 2023. We are expecting the following significant changes:
Global oil demand picks up by 2.11 million b/d. We are currently using IEA's oil demand assumption as we think it is the most conservative out of the 3. The demand revision still has OECD well below the 2019 average of 47.77 million b/d, while non-OECD is nearly ~3 million b/d higher driven by China and India. We think this is a conservative estimate.
US and Canada are expected to increase production by ~1.15 million b/d y-o-y. US shale will likely propel US oil production average to reach ~12.9 million b/d Q4 2023.
Other regions around the world are expected to show a decline in production. This is the result of years of lack of capex spending. In essence, this results in ex-OPEC production increasing by only ~0.49 million b/d y-o-y.
Russian oil production is expected to drop to ~10.1 million b/d by Q4 or a decrease of 500k b/d and remain there until the end of 2023. We went extra conservative on this because we think the long-term impacts of Russia's oil production decline won't be felt till the second half of 2023.
OPEC is expected to show the highest production increase with Saudi increasing production average to ~11 million b/d and Iranian sanctions to be lifted by this year. We expect Iranian production to increase to ~3.75 million b/d by Q4 2022 (very extra conservative on this front). We understand sanction relief will take a while, so a more realistic projection is for Iran to ramp up production in Q2 2023. You will see in the quarterly breakdown why this may impact how you think about the oil market.