China's recovery boosted oil demand

On June 15, the IEA said in its monthly report that a recovering China will drive global oil demand growth next year, and global oil demand will reach a new high
in 2023.
At that time, the global oil supply will be "difficult to meet" the growing demand
.

On the demand side, the IEA expects global oil demand growth to increase to 2.
2 million b/d in 2023, from 1.
8 million b/d in 2022, to an average of 101.
6 million b/d
.
The IEA believes that while higher oil prices and a weak economic outlook continue to dampen the group's expectations for oil demand growth, a resurgent China next year will drive global oil demand growth next year:

"A resurgent China next year will drive global oil demand growth
next year.
In stark contrast to OECD-led growth in 2022, non-OECD economies will account for nearly 80%
of new demand next year.
”

The agency believes that rising demand for aviation fuel and petrochemical feedstock LPG and crude gasoline will dominate growth in 2023, in large part due to "a strong recovery in Asian demand following the severe disruption of the coronavirus pandemic in 2022"
.

On the supply side, the IEA said supply may struggle to keep pace with demand next year as Europe and the United States impose tougher sanctions on Russia, while the buffer of spare capacity in other OPEC+ members is decreasing
.

The agency expects non-OPEC+ producers to lead crude supply growth
.
Specifically, producers outside the OPEC+ bloc will increase supply by 1.
9 million b/d in 2022 and a further 1.
8 million b/d in 2023, with the U.
S.
accounting for 60%
of non-OPEC+ production increments next year.

In contrast, supply from OPEC+ producers is likely to decline
in 2023 as sanctions lower Russian production and OPEC+ production outside the Middle East.
The IEA expects Russia's output to fall by nearly 3 million b/d this year as more sanctions are imposed, resulting in a 520,000 b/d
drop in total OPEC+ production in 2023.
As a result, the IEA believes that global oil supplies will be "difficult to meet" growing demand:

"Global oil supply may struggle to keep up with demand next year as tougher sanctions force Russia to close more wells and some producers experience capacity constraints
.
"

In terms of Russian oil, the IEA admitted that Russia's oil production was higher than expected
.
The agency estimates that although overall exports have declined, the overall decline in exports is mainly due to
lower exports of refined products.
In contrast, crude oil exports increased by nearly 500,000 b/d
from the beginning of the year.
As a result, total revenues from Russian oil products surged to $20 billion in May, roughly the
same as before the conflict between Russia and Ukraine.

Wall Street has seen that under the influence of the "eastward shift" of Russian oil trade, Russia's crude oil export trade routes have been fully adjusted
.
In May, Russia successfully replaced Saudi Arabia as India's
second-largest oil supplier.

The IEA said it expects Russian oil production to remain stable this month before starting to decline gradually as
the EU embargo is phased in.

After the release of the IEA report, Investec commodity director Callum Macpherson commented that the IEA's supply and demand forecast hinted that oil prices are likely to rise
further next year.

Since the beginning of this year, oil prices have been running
at a high level due to factors such as insufficient investment, demand rebound after the weakening of the impact of the epidemic, and supply problems aggravated by the Russia-Ukraine conflict.
At press time, Brent crude was trading at $120.
45 a barrel and WTI crude was trading at $117.
96 a barrel
.