OIES Oil Monthly

July 2023

Key insights

§ Our Brent forecast is maintained at $81.5/b in 2023 and

$86.9/b in 2024, little changed from last month. Deeper
OPEC+ cuts combined with softer non-OPEC supply growth in H2 Forecasts summary
will gradually overcome the -$1.1/b downwards adjustment in our
Reference
Q2 price forecast. Brent is expected to break above $80/b from
August onwards and remain rangebound in the $80s for the rest 2023 2024
of the year and for most of 2024 with prices picking up again in H2 Price outlook
2024 as the supply/demand balance tightens, and progressively USD/b
moving to the high-$80s before reaching $92.1/b in Q4.
Brent price 81.5 86.9
§ Following the extension of Saudi Arabia’s additional 1 mb/d Brent prospect 81.1 85.4
cut into August and new cut pledges from Algeria and Russia
Brent low 77.8 70.3
for that month, we have revised the Q3 2023 deficit deeper by
Brent high 84.5 99.1
290 kb/d to 1.64 mb/d, implying tighter market balances for
H2 as a whole. For 2024, the global balance remains unchanged Global balance
at a deficit of 0.2 mb/d as small downgrades in both mb/d
supply/demand offset one another. Demand 101.6 103.0
(y/y chg.) 1.9 1.4
§ Global oil demand is forecast to grow 1.9 mb/d in 2023, 270
kb/d higher than last month’s forecast and is unchanged at Supply 101.2 102.8
1.4 mb/d in 2024. The 2023 outlook is raised on US demand (y/y chg.) 1.3 1.5
growth resilience that saw a 161 kb/d uptick in H1 compared to Global balance -0.3 -0.2
our forecast last month, as did oil demand in several non-OECD Source: OIES
countries which performed better than expected.

§ Global oil supply is forecast to grow 1.3 mb/d in 2023, up 70

kb/d. Growth is underpinned by stronger non-OPEC actuals Brent price outlook
in H1 2023, but has been downgraded -160 kb/d to 1.5 mb/d in
2024. OPEC-10 crude growth is scaled back in both 2023 and
2024 by -120 kb/d and -130 kb/d respectively on the Saudi cut
extension to the month of August and additional voluntary OPEC+
cuts. But in terms of total OPEC crude in 2023, this is offset by a
130 kb/d upgrade to Iranian production to 2.9 mb/d. Russian
crude will hover close to its 9.5 mb/d target for the remainder of
the year, with growth momentum outside OPEC+ easing in H2 as
US shale growth begins to slow.

§ We have adjusted the balance of risks lower in 2023 and

2024. The downside demand risks in the very near-term have
prompted us to shift the H2 balance of risks by -$1.4/b. We
have also adjusted the balance of price risks in 2024 by -$1.4/b
amid firmer Russian output expectations in 2023, OPEC+
maintaining a larger spare capacity cushion and amidst ongoing
Source: OIES
macro risks and uncertainties.

The contents of this report are the authors’ sole responsibility. 1

They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.
 OIES Oil Monthly
July 2023

Key insights

The contents of this report are the authors’ sole responsibility. 2

They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.
 OIES Oil Monthly
July 2023

Demand

Global oil demand headed for slower but steady growth in H2

Regional oil demand

Global oil demand by region

Source: IEA, Argus, NBS, PPAC, OIES forecast

Global oil demand growth by region

Source: IEA, Argus, NBS, PPAC, OIES forecast

The contents of this report are the authors’ sole responsibility. 4

They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.
 OIES Oil Monthly
July 2023

Demand

Gasoline and gasoil/diesel demand to perform better in 2023

Oil products demand

Global oil demand by product

Source: IEA, Argus, NBS, PPAC, OIES forecast

Global oil demand growth by product

Source: IEA, Argus, NBS, PPAC, OIES forecast

The contents of this report are the authors’ sole responsibility. 5

They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.
 OIES Oil Monthly
July 2023

Supply

US supply growth slows in H2

Non-OPEC

Non-OPEC crude oil production

Notes: Crude/co only. Source: IEA, OIES forecast

US crude oil production Production from selected non-OPEC

Notes: Crude/co only. Source: US EIA, IEA, OIES forecast Notes: Crude/co only. Source: IEA, OIES forecast

The contents of this report are the authors’ sole responsibility. 6 14

They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members.