Global oil markets

Global oil demand and prices
The Brent crude oil spot price fell from an average of $85 dollars per barrel (b) in April to close at $73/b on May 4. At the beginning of April, OPEC and partner countries (OPEC+) announced a cut to crude oil production of 1.2 million barrels per day (b/d) through the end of 2023, which increased crude oil prices on expectations of tightening oil supplies. However, ongoing considerations about weakening global economic conditions, perceived risk around the global banking sector, and persistent inflation outweighed the initial increase in oil prices and have led to lower prices.

Although demand growth for liquid fuels faces downside risks through the end of 2024, we expect the seasonal rise in oil consumption and a drop in OPEC crude oil production to put some upward pressure on crude oil prices in the coming months. Global liquid fuels consumption in our forecast increases by 1.6 million b/d in 2023 and by 1.7 million b/d in 2024, and most expected liquid fuels demand growth is in non-OECD Asia, led by China and India. We expect this demand growth will bring the global oil market into balance between the third quarter of 2023 (3Q23) and 1Q24 and push the Brent price from current levels back to between $75/b and $80/b.

Beginning in 2Q24, we expect consistent global oil inventory builds over the rest of the forecast period as global oil production outpaces global oil demand, putting downward pressure on crude oil prices. We forecast global oil inventories will grow by 0.3 million b/d in 2024, and we forecast the Brent crude oil spot price to average $74/b in 2024, $7/b lower than in last month’s STEO.

Global oil supply
Global liquid fuels production in our forecast increases by 1.5 million b/d in 2023 compared with 2022 primarily because of growth from non-OPEC producers. Excluding production from Russia, which we forecast to fall by 0.3 million b/d in 2023, we expect that non-OPEC liquid fuels production will increase by 2.2 million b/d in 2023 and by an additional 1.1 million b/d in 2024.

We forecast Russia’s crude oil and other liquid fuels production will decline from 10.9 million b/d in 2022 to 10.6 million b/d in 2023 and to 10.5 million b/d in 2024. Russia’s production in March and April declined in part due to announced production cuts of 0.5 million b/d and maintenance at refineries in Russia, which we expect will end in June. Our assumption of a return to near-normal refinery operations contribute to a slight increase in Russia’s liquids fuel production from 10.4 million b/d in the second quarter of 2023 to 10.5 million b/d through 2024.

We forecast that total OPEC crude oil output will fall by 0.3 million b/d in 2023, in large part due to the April 3 OPEC+ announcement to cut production. In addition to the expected adherence to the voluntary production cuts, recent disruptions to crude oil exports in Iraq and a force majeure limiting crude oil exports in Nigeria have also reduced our near-term OPEC forecast in 2023. We forecast total OPEC liquid fuels production to increase by 0.6 million b/d in 2024 driven by the end of the current OPEC+ production cuts in 2023.