The global oil market faces mixed outlook with concerns about a potential global recession and persistent high inflation weighing on demand growth.
However, voluntary cuts from OPEC+ and unplanned outages from Iraq and Nigeria could lead to a decline in supply, which could put upward pressure on prices. We expect OPEC supply to decline by 500,000 b/d in 2023.
Brent averaged $84.64/bbl in April, but lost all the gains of the OPEC+ “voluntary cut” announcement following another round of interest rate rises from the Fed and European central banks. China and Europe’s poor March PMI data suggests economic recovery is still unstable.
IMF lowered global GDP growth by 0.1% for both 2023 and 2024 attributed to continued Russia-Ukraine war, high inflation and the fragile banking sector.
Despite uncertainties, the EIA raised its average Brent forecast for 2023 by $1.48/bbl to $85.01/bbl as a result of the announced OPEC+ cut agreement.
Our global oil demand growth forecast is unchanged at 1.81 mb/d in 2023. If demand rises strongly, there could be a market deficit in the second half of 2023, adding pressure on prices.
Global production growth is forecast to be 1.06 mb/d in 2023, all from non-OPEC+ countries.
Record discounted Russian oil flow to China and India in March, with further increases in April could limit the impact of OPEC+ cuts.
