The U.S. Energy Information Administration (EIA) has revised its global liquid fuels production forecast for the years 2023 and 2024 in its recent Short-Term Energy Outlook (STEO). According to the November STEO, the anticipated total world production for this year is 101.54 million barrels per day and is expected to increase to 102.55 million barrels per day in 2024. The global output projections for specific quarters indicate an average of 102.05 million barrels per day in Q4 2023, 101.85 million barrels per day in Q1 2024, 102.25 million barrels per day in Q2 2024, 102.98 million barrels per day in Q3 2024, and 103.12 million barrels per day in Q4 2024.
In comparison to the October STEO, the EIA’s latest projections reflect an upward revision. The October forecast had estimated global liquid fuels production to be 101.26 million barrels per day in 2023 and 102.19 million barrels per day in 2024. These figures were associated with an average output of 101.56 million barrels per day in Q4 2023, 101.53 million barrels per day in Q1 2024, 101.94 million barrels per day in Q2 2024, 102.58 million barrels per day in Q3 2024, and 102.73 million barrels per day in Q4 2024.
The November STEO emphasized that the global liquid fuels output averaged 99.99 million barrels per day in 2022. The EIA’s forecast for 2024 anticipates a growth of 1.0 million barrels per day, down from the 1.6 million barrels per day growth expected in 2023. Despite the projected growth in global oil production, ongoing cuts from OPEC+ are anticipated to keep the production growth lower than global consumption growth. This is expected to contribute to inventory draws and upward pressure on oil prices in the early part of 2024.
The growth in global crude oil supply has been constrained in 2023 due to voluntary production cuts from Saudi Arabia and ongoing cuts from other OPEC+ countries. This has resulted in an increase in OPEC’s spare crude oil production capacity from 2.4 million barrels per day in 2022 to a forecasted 4.3 million barrels per day in 2024. Saudi Arabia and the United Arab Emirates hold the majority of this spare capacity.
Regarding specific regions, Russia’s output is expected to remain relatively stable at around 10.7 million barrels per day over the forecast period. The EIA highlighted potential risks to oil supply, including surplus production capacity, arising from heightened uncertainty around recent attacks on Israel and the potential for tensions to spread in the Middle East.
The U.S. lifted sanctions on Venezuela’s crude oil exports on October 18 for six months, contingent on electoral reforms. However, the EIA expects limited increases in oil production from Venezuela, forecasting an increase of less than 0.2 million barrels per day to an average of 0.9 million barrels per day by the end of 2024. Further increases are expected to take longer and require significant investment.
In the case of Iran, the EIA noted that its crude oil production has risen in recent years, primarily through increased exports to China at discounted prices. The EIA’s assumption is that Iran will raise production by an additional 0.2 million barrels per day in 2024. Sanctions, insufficient upstream investment, and limited oil consumption growth in China are identified as factors limiting Iran’s oil production beyond this limited growth.
The International Energy Agency’s (IEA) November Oil Market Report (OMR) supported the notion of exceeding expectations in world oil supply growth. Despite concerns about the potential disruption of oil supply flows due to geopolitical tensions, the IEA reported that world oil supply is on an upward trajectory. The report highlighted record output from the United States, Brazil, and Guyana, contributing to a 1.7 million barrels per day increase in global oil supplies, reaching a record 101.8 million barrels per day in 2022. Non-OPEC+ producers are expected to lead global growth in 2024, with a projected increase of 1.6 million barrels per day to reach an unprecedented 103.4 million barrels per day.
The temporary easing of U.S. sanctions on Venezuela in late October is expected to have only a marginal impact on supply, as production increases from the country’s oil sector will take time and investment.
In summary, the EIA’s revised global liquid fuels production forecast, as indicated in the November STEO, reflects an upward adjustment from the October projections. The report emphasizes the impact of OPEC+ cuts on global production dynamics, geopolitical risks, and specific country considerations, including Russia, Venezuela, and Iran. The IEA’s OMR supports the idea of exceeding expectations in world oil supply growth, with non-OPEC+ producers playing a leading role in this trend. The global energy landscape remains dynamic, influenced by a range of factors, and careful monitoring of these developments is crucial for informed projections and decision-making.