Global Oil Demand Will Set a New High of 101.7 Barrels

The chief executive officer of the world’s largest oil company is concerned about global crude supplies.

Demand has been relatively low due to market factors like China’s slowing economy and the aviation industry’s ongoing COVID-19 pandemic recovery, but this is about to change. Amin Nasser, CEO of Saudi Aramco, is concerned that the world will not have enough extra capacity to deal with the shift.

Aramco produces approximately 10% of the world’s crude oil supply. It can pump a maximum of 12M barrels of crude per day. Global oil demand will rise by 1.9M barrels in 2023 to a record 101.7M per day, with China accounting for nearly half of that increase. During the same time period, the agency anticipates a slowing of the growth of the oil supply to 1M barrels per day.

Saudi Arabia and many of its OPEC producers’ alliance partners have repeatedly called for concurrent investment in hydrocarbons and energy transition to avoid a future supply squeeze.

The impending supply-demand dynamic may boost prices. CEO of the Spanish oil company Cepsa, Maarten Wetselaar, predicted on Wednesday that crude oil prices would return to the triple digits in the second half of 2023. At midday in London, front-month Ice Brent crude futures were trading near $87.36 per barrel.

Gas Prices in Europe Have Plummeted

The thermal coal market has benefited greatly from turmoil in Europe’s energy sector in 2022, with prices rising more than 250% in mid-March as utilities and traders sought to replace Russian gas supplies with other fuels.

Benchmark European thermal coal prices averaged about $285 per tonne in 2022, up from about $115 per tonne in 2021, and they continued to be relatively high.

Higher coal use also resulted in more pollution. Cumulative CO2 emissions from Europe’s coal power sector exceeded 600M tonnes through November, the highest tally since 2019, according to Ember data. However, due to a recent drop in European natural gas prices – down 60% since December 1 due to mild winter temperatures, full storage tanks, and reduced industrial use – European coal prices and demand have fallen so far in 2023.

The demand for thermal coal and other power-generating fuels in Europe increased significantly in 2022, forcing utilities and trading companies to adjust to significantly reduced expected supplies of pipelined Russian natural gas.