Opec expects global oil demand to cross pre-pandemic levels in 2023

Record level expected as China's economy recovers, secretary general says

Haitham Al Ghais, secretary-general of Opec, says an investment of $12.1 trillion is required until 2045 to ensure stability in global energy markets. Bloomberg

Opec expects global oil demand to exceed pre-pandemic levels in 2023, amid an improving economic outlook in top crude importer China, Haitham Al Ghais, the group’s secretary general, said on Sunday.

Mr Ghais, who was speaking at the Egypt Petroleum Show in Cairo, also said an investment of $12.1 trillion is required until 2045 to ensure stability in global energy markets.

Oil demand is expected to reach record levels this year after China, the world’s second-largest economy, lifted pandemic curbs following strict adherence to a zero-Covid policy for nearly three years.

China is forecast to expand 5.2 per cent this year after beating expectations with a 3 per cent acceleration in 2022, according to the International Monetary Fund.

Brent, the benchmark for two thirds of the world’s oil, surged to $90 a barrel last month on hopes of a swift fuel demand rebound in China. However, rising oil stocks in the US and expectations of further interest rate increases have weighed on crude futures in recent weeks.

Brent, which soared to nearly $140 a barrel following Russia’s invasion of Ukraine last year, closed trading on Friday at $86.39.

The International Energy Agency has said China will account for nearly half of its 2023 oil demand growth forecast of 1.9 million barrels per day.

China’s recovery and sanctions on Russian oil exports are expected to tighten global crude supplies in the second half of the year, analysts said.

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At its meeting this month, the Opec+ alliance of 23 oil-producing countries agreed to roll over existing output cuts of 2 million bpd.

A 1.1 million bpd rise in China demand this year could push oil markets back into a supply deficit in June and lead Opec+ to reverse its production cuts, Goldman Sachs said in a research note last week.

“If Russia production were to stay flat, then Brent would likely only rise to $95 per barrel by December because steady Opec production would only partly undo the bearish effects from higher supply and less elevated long-term costs,” Goldman Sachs said.