IEA Warns Oil Markets Could Swiftly Swing To Deficit

17 Feb 2023 Issue: 66 / 7 By: Jamie Ingram

Industry forecasters are revising up expectations of Chinese demand growth this year, pointing to a potential supply shortfall by the end of 2023. Saudi Arabia’s Minister of Energy says evidence of a sustained recovery is required before any easing can take place, pointing to a cycle of re-opening and lockdowns when other countries exited Covid restrictions.

Approaching the first anniversary of Russia’s 24 February 2022 invasion of Ukraine, “global oil markets are trading in relative calm,” says the IEA. While 2022 was a year of unprecedented market volatility, the dominant phrase of the opening weeks of 2023 has been that “oil prices are rangebound.” So far, Brent has struggled to break out of an $80-85/B range as market participants warily eye supply dynamics in Russia and demand dynamics in China.

“World oil supply looks set to exceed demand through the first half of 2023,” notes the IEA in its February Oil Market Report (OMR). But the agency is swift to warn against torpor, saying “the balance could quickly shift to deficit as demand recovers and some Russian output is shut in.” (CONTINUED - 948 WORDS)