Page 6 - FSUOGM Week 04 2023

FSUOGM COMMENTARY FSUOGM

IEA expects an inflection in oil

markets in 2023 when demand will

exceed supply

The IEA says demand will continue to outstrip supply.

GLOBAL THE International Energy Agency (IEA) reports thing happened in the first months of the war
that oil demand this year will grow by 1.9mn bar- in Ukraine where Russian exports fell as trad-
WHAT: rels per day, to a record 101.7mn bpd, and supply ers avoided buying the Urals blend and the dis-
The IEA estimates that by 1mn bpd, to 101.1mn bpd, in its first monthly count increased then as well. However, after a
oil demand will grow by report for 2023 released on January 18. Russia’s few months traders in Asia – in India and China
1.9mn bpd in 2023 and federal budget is already under pressure from in particular – stepped in to buy the very cheap
supply by only 1mn bpd. tumbling oil and gas revenues but with a bit of Russian oil driven by market forces. Analysts
luck a rise in oil prices in the second half of this assume that something similar will happen now,
WHY: year could take some of the pressure off. but where the export volumes and prices will set-
Russia’s federal budget is The oil market has already been hit by the tle remains a matter of debate.
reeling from lower oil and oil price cap scheme and EU embargo on the The IEA predicts that there will be a turning
gas prices, but a rise in import of Russian crude that went into effect on point in the international oil market in the mid-
oil prices could help take December 5. It will receive a second blow when a dle of this year. The latest IEA's Monthly Oil Sta-
the pressure off. similar two-speed embargo and price cap regime tistics report including October 2022 data shows
is introduced by the EU on February 5 that will that for the main areas within the OECD:
WHAT NEXT: further affect supplies. However, oil prices for • Total OECD production of crude oil,
The downside risk is the Brent rose to $85 after the IEA released its report NGL and refinery feedstocks increased
impact of the EU embargo on January 18. by 4.3% in October 2022 compared to
and potentially also the So far, the EU ban on crude has led to a fall October 2021.
Western price cap. in Russia’s exports of crude as international • Refinery gross output of total products
tanker companies shy away from Russian oil, grew by 1.9% on a year-on-year basis.
afraid of secondary sanctions. The discount on • Net deliveries of total products
the Russian Urals blend of oil has also blown decreased by 1.5% in October 2022
out to almost 50% against the benchmark compared to October 2021.
Brent blend. • Oil stock levels on national territory
However, analysts speculate that these grew by 396,000 tonnes in October 2022
changes in price and volume will be temporary compared to the closing stock levels in
while the market and Russia find new routes September 2022 and closed at 472mn
and customers for its oil products. A similar tonnes.

P6 www. NEWSBASE .com Week 04 25•January•2023