The global supply of crude oil will greatly exceed demand at least during the first half of the year, according to the International Energy Agency (IEA), which recognizes that in the second half of the year the surge in consumption will pose a challenge, especially due to uncertainty about what will happen to russian oil.
In its monthly report on the oil market published this Wednesday, the IEA indicates that global demand will accelerate as the year progresses, with growth going from just 710,000 barrels per day in the first quarter to 2.6 million in the fourth.
Together, this increase will be 2 million barrels per day on average in 2023, lower than the 2.3 million in 2022, which will lead to a new record in which the world will absorb 102 million barrels each day.
The kerosene used by planes will be the main growth factor in global oil consumption this year, 57% of the total. The reason is the reestablishment of many domestic flights in China, after the end of the covid restrictions, and more generally the gradual recovery of activity after the collapse due to confinements around the world in 2020.
The IEA highlights that the number of flights has gone from an average of 98,000 daily in December (89% of those in 2019, before the outbreak of the coronavirus crisis) to 107,000 in February, which represents only 1.4%. below the level of 2019.
US and Canada put more crude on the market
On the supply side of crude oil, in February it rose by 830,000 barrels to 101.5 million thanks mainly to the United States and Canada, while OPEC+ contributed 180,000 barrels per day more than in January.
In fact, IEA experts estimate that the producing countries that do not belong to the bloc that make up the Organization of Petroleum Exporting Countries with its partners (OPEC+) will release an average of 1.6 million barrels per day on the market this year.
A sufficient amount to cover the demand in the first semester, but that could stop being so in the second half of the year with the expected pull in consumption.
One of the keys to clear up that mystery is Russia. Its production in February has remained close to the volumes before its invasion of Ukraine just over a year ago now, but its exports have fallen by more than 500,000 barrels a day to 7.5 million.
The reason is that shipments to the countries of the European Union (EU) have plummeted to 580,000 barrels per day, that is, 760,000 less in a month.
In one year, Russia has had to find new markets for 4.5 million barrels per day that it sold to the countries that are applying sanctions in the EU, Asia or North America.
India and China absorb 70% of Russian oil
These alternatives have been found above all in India and China, which in February absorbed 70% of Russian crude exports, which in turn represented 40% and 20%, respectively. of those countries’ oil purchases.
Some percentages that make the IEA doubt that India and China feel comfortable with these levels of dependence on a single supplier, as well as doubt that there will continue to be so much appetite for Russian production with the application of Western sanctions.
The report’s authors say Russia’s oil revenue last month stood at $11.6 billion, down $2.7 billion from January. That’s half of what he was getting before the invasion of Ukraine.
Another element that will determine whether the global market continues with a comfortable supply margin is the level of reserves, which is currently particularly high.
In January, those reserves increased by 52.9 million barrels to about 7.8 billion, the highest point since September 2021. Also, preliminary data for February point to a further rise.