The Israel-Hamas conflict and heightened geopolitical tensions initially raised oil prices by over $5/bbl but later dropped below $90/bbl due to concerns about a slowing global economy outweighing the war risk premium.
The US lifting sanctions on Venezuela, releasing 200,000 b/d into the market, exerted downward pressure on prices.
The worsening Chinese property sector’s debt crisis could impact the financial system and impact the already weak economy. IMF revised China’s GDP growth down for both 2023 and 2024.
Despite weaker economy, Chinese oil demand rebound strongly, growing 1.96 mb/d this year, almost 80% of world total growth of 2.48 mb/d driven by rebound in travelling and industry, and petrochemical expansion.
However, demand growth for 2024 is expected to slow to 1.48 mb/d as a result of slower Chinese and global economies.
US LTO production grew 790,000 b/d January to July y-o-y, outperforming estimates. The revised forecast sees global production to grow 1.48 mb/d in 2023, all from non-OPEC countries.
If Saudi Arabia adds more barrels from next year, the market may face a surplus in 2024, which could exert downward pressure on oil prices, assuming geopolitical tensions remain contained.
