Crude oil: paying attention to the trends of oil producing countries

■ International institutions maintain expectations of a slowdown in global crude oil demand growth next year.
■ The trends of major oil producing countries vary, focusing on the impact on crude oil supply and demand.

As of November, international agencies’ outlook on global crude oil supply and demand has been released. The Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report released on the 13th that global crude oil demand is expected to increase by 2.52% year-on-year in 2023, reaching 121 million barrels per day, slightly higher than last month’s forecast (same growth of 2.45%). This is part of the expected backdrop, despite downward revisions to demand forecasts from members of the Organization for Economic Co-operation and Development (OECD), but upward revisions from non-member emerging countries outweighed the downward revisions. In addition, affected by the global economic slowdown in 2024, which is expected to increase by 2.20% year-on-year, the growth rate will slow down, and this expectation remains unchanged. The International Energy Agency (IEA, 2023: Same 2.41% growth → 2024: Same 0.88% growth) and the U.S. Energy Information Administration (EIA, 2023: Same 1.90% growth → 2024: Same 1.39% growth) also expressed similar sentiments view. However, regarding the extent of demand slowdown in 2024, OPEC is optimistic that demand led by China will remain strong, while the IEA is more concerned about the impact of the economic slowdown and improvements in energy efficiency.
For the outlook of global crude oil supply, due to political reasons and other factors, currently only EIA provides the outlook among international institutions. The EIA has raised the global crude oil supply for 2023 (with a growth rate of 1.31% → a growth rate of 1.64%) and 2024 (with a growth rate of 0.92% → a growth rate of 0.99%), but this view is still maintained as the "OPEC Plus" composed of OPEC member and non-member oil producing countries is believed to strengthen collaborative and autonomous production reduction, with expected growth below last year's levels. According to the EIA's expectations, global crude oil supply and demand will basically reach equilibrium from the second half of this year to the beginning of next year.
When looking at global crude oil supply and demand in the future, the demand side will mainly focus on the economic recovery speed of emerging countries such as China. On the supply side, continuing to monitor the trends of major oil producing countries will be crucial. The United States' crude oil production has reached its highest level in history, while Russia has lifted its ban on gasoline exports. On the other hand, it is reported that OPEC Plus will consider further production cuts at its ministerial meeting on the 26th, and is also considering continuing Saudi Arabia's independent production reduction. We need to closely monitor the trends of major oil producing countries to understand their impact on crude oil supply and demand. In addition, we should continue to be vigilant about the trend of the Middle East conflict. If local conflicts are limited to military conflicts, the impact on the crude oil market may be limited. However, if they develop into conflicts involving major oil producing countries such as Saudi Arabia and Iran, due to the expected significant impact on the supply and demand balance of crude oil, crude oil futures prices (WTI) may experience significant fluctuations. Therefore, we need to remain vigilant.