November 16, 2023, Launceston, Australia (Reuters)
The International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) remain optimistic about robust world oil demand growth in 2023, primarily driven by Asia. However, a closer look at actual crude imports in the region reveals a nuanced reality.
In its latest monthly oil market report released on November 14, the IEA raised its forecast for crude oil demand growth in 2023 by 100,000 barrels per day (bpd) to 2.4 million bpd. This adjustment brought the IEA’s outlook closer to that of OPEC, which, in a report on November 13, increased its 2023 demand forecast to a rise of 2.46 million bpd, up 20,000 bpd from its previous release.
Both organizations heavily emphasize China in their demand growth scenarios, with the IEA predicting a 1.8 million bpd increase in the world’s largest oil importer’s demand in 2023.
Despite a difference between overall demand and import levels, a significant gap exists between the IEA’s forecast for demand growth and the actual increase in imports in 2023. Chinese imports for the first 10 months of the year were 11.36 million bpd, up 1.43 million bpd from the same period in 2022, falling short of the IEA’s optimistic projection.
While China’s domestic crude output has not substantially risen, and the possibility of meeting demand through stockpiles exists, the country has been adding to inventories rather than drawing from them.
OPEC’s estimate of China’s demand growth in 2023 at 1.14 million bpd appears more accurate than the IEA’s forecast.
Beyond China, the overall picture in Asia is mixed, with oil imports not experiencing substantial growth in 2023. The continent’s crude imports for the first 10 months reached 26.93 million bpd, a modest increase of 1.34 million bpd compared to 2022.
India, the second-largest crude importer in Asia, showed strong growth in arrivals but was not sufficient to align with the optimistic forecasts. The rest of Asia witnessed a decline in arrivals, making the overall increase relatively modest and unlikely to meet IEA and OPEC projections.
While OPEC foresees strength in the Middle East’s demand growth, the global crude market faces the crucial question of whether demand forecasts hold more significance in setting price levels than the actual imports by consuming nations.