Global oil demand is expected to reach an all-time high this year. However, there are also forecasts that the growth rate will slow down more than expected due to the economic downturn.
The International Energy Agency (IEA) announced in its July 2023 Oil Market Report on the 13th (local time) that global oil demand this year is expected to increase by 2.2 million barrels per day, reaching a record high of 102.1 million barrels per day. This figure is about 220,000 barrels lower than last month's forecast.
The IEA stated that this is the first time this year that the demand growth forecast has been revised downward. It explained, "Global oil demand is under pressure from a challenging economic environment," adding, "especially affected by the sharp tightening monetary policies in many advanced and developing countries over the past 12 months."
About 70% of this year's increase in oil demand is predicted to come from China. The IEA expects China to accelerate its economic rebound in the second half of the year as it recovers from the COVID-19 pandemic.
Unlike demand, supply is expected to sharply decrease this month as Saudi Arabia implements additional production cuts.
Saudi Arabia has decided to reduce its crude oil production from 10 million barrels per day to 9 million barrels per day starting this month, cutting 1 million barrels.
Russia's oil exports last month, which have been sanctioned by the West since the invasion of Ukraine, fell by 600,000 barrels to 7.3 million barrels, marking the lowest level since March 2021.
To prevent a decline in oil prices and export revenue, Russia plans to implement an additional production cut of 500,000 barrels per day starting next month.
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