The International Energy Agency increased its global oil demand growth estimate for this year and the next on rising crude consumption in India, China and the Middle East.
The IEA now expects oil demand to grow by 1.7 million barrels per day in 2023, up from its previous estimate of 1.6 million.
This year, oil demand will grow by 2.3 million bpd, a 140,000 bpd increase over the agency’s previous forecast.
“Despite the seasonal slowdown in world oil demand and continued macro-economic headwinds, recent oil consumption data have surprised to the upside,” the IEA said.
Demand in Organisation for Economic Co-operation and Development (OECD) countries is still depressed because of weak petrochemical activity in Europe and Asia, the agency said.
Russia's oil exports rose in November ahead of a December 5 price cap imposed by the G7.
The country’s oil exports increased by 270,000 bpd to 8.1 million bpd, the highest since April, as diesel exports surged nearly 38 per cent to 1.1 million bpd.
But Russia’s oil export revenues dropped, by $700 million, to $15.8 billion on lower crude prices and steeper discounts.
Global oil supply last month fell 190,000 bpd to 101.7 million bpd after Saudi Arabia and other Gulf countries curbed supply in line with Opec+ output targets.
A steeper drop is expected in December due to the EU ban on Russian crude imports and the G7 price cap, the agency added.
Brent, the benchmark for two thirds of the world’s oil, fell below $80 a barrel last week for the first time since January amid concerns of a recession in several countries and slowing growth in China, the world’s second-largest economy and top crude importer.
Brent crude was trading 0.93 per cent higher at $81.43 a barrel at 7pm UAE time on Wednesday.
“While lower oil prices come as a welcome relief to consumers faced by surging inflation, the full impact of embargoes on Russian crude and product supplies remains to be seen,” the IEA said.
“As we move through the winter months and towards a tighter oil balance in the second quarter of 2023, another price rally cannot be ruled out.”
On Tuesday, Opec stuck to its oil demand growth forecast for this year and 2023.
The oil producer group expects the world economy to grow 2.8 per cent this year, up from its previous estimate of a 2.7 per cent growth.
The 2023 global economic growth forecast was unchanged at 2.5 per cent.
“Risks to global economic growth remain skewed downwards due to challenges including high inflation, monetary tightening by major central banks, [and] high sovereign debt levels in many regions,” Opec said.
“Moreover, geopolitical risks and the pace of the Covid-19 pandemic during winter remain uncertain.”
Global economic growth is forecast to be as weak as it was in 2009 — during the global financial crisis — as a result of the Ukraine conflict and its impact on the world economy, according to the Institute of International Finance.
The world economy is projected to grow 1.5 per cent next year, compared with 0.6 per cent in 2009, per IIF estimates.