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The U.S. Energy Information Administration (EIA) increased its global liquid fuels production forecast for 2023 and 2024 in its latest short term energy outlook (STEO).
Total world production is now expected to be 101.54 million barrels per day this year and 102.55 million barrels per day next year, the November STEO revealed. Global output is anticipated to average 102.05 million barrels per day in the fourth quarter of 2023, 101.85 million barrels per day in the first quarter of 2024, 102.25 million barrels per day in the second quarter, 102.98 million barrels per day in the third quarter, and 103.12 million barrels per day in the fourth quarter, according to the STEO.
In its previous STEO, which was released in October, the EIA projected that global liquid fuels production would be 101.26 million barrels per day in 2023 and 102.19 million barrels per day in 2024. That STEO saw output averaging 101.56 million barrels per day in the fourth quarter of 2023, 101.53 million barrels per day in the first quarter of next year, 101.94 million barrels per day in the second quarter, 102.58 million barrels per day in the third quarter, and 102.73 million barrels per day in the fourth quarter.
The EIA’s latest STEO highlighted that global liquid fuels output averaged 99.99 million barrels per day in 2022.
“We forecast global liquid fuels production will increase by 1.0 million barrels per day in 2024, down from growth of 1.6 million barrels per day this year,” the EIA noted in its November STEO.
“Although we forecast global oil production to grow next year, we expect ongoing cuts from OPEC+ will keep global production growth lower than global consumption growth and contribute to inventory draws and upward oil price pressure in the early part of 2024,” it added.
“Growth in global crude oil supply has been limited in 2023 because of voluntary production cuts from Saudi Arabia and ongoing production cuts from other OPEC+ countries, which raised OPEC’s spare crude oil production capacity from 2.4 million barrels per day in 2022 to a forecast of 4.3 million barrels per day in 2024,” the EIA continued, stating that Saudi Arabia and the United Arab Emirates hold most of this capacity.
Russia, Middle East, Venezuela, Iran
In the STEO, the EIA highlighted that Russia’s output stabilized in mid-2023 at around 10.6 million barrels per day and said it assumes the country’s oil production will remain relatively flat over the remainder of its forecast period at an average of 10.7 million barrels per day.
The EIA warned in the STEO that “heightened uncertainty around the recent attacks on Israel and the potential for tensions spreading to a wider area in the Middle East poses risks to oil supply, including available surplus production capacity”.
“At this time, we have not materially changed our oil production forecast for countries in the region, but the geopolitical situation could change rapidly,” the EIA said in the STEO.
The EIA also noted in the STEO that the U.S. lifted sanctions on Venezuela’s crude oil exports on October 18 for six months, contingent on electoral reforms, but added that, “while the political situation remains in flux, we expect sanctions relief will only lead to limited increases in oil production”.
“With sanctions relief, we forecast that Venezuela will increase crude oil production by less than 0.2 million barrels per day to an average of 0.9 million barrels per day by the end of 2024,” the EIA said in the STEO.
“Further increases in Venezuela’s crude oil production will take longer and require significant investment after years of deferred maintenance and lack of access to capital,” it added.
In its November STEO, the EIA also highlighted that Iran’s crude oil production rose in recent years “as it has increased exports to China using heavily discounted prices”.
“Our assumption is that Iran will raise production by an additional 0.2 million in 2024,” the EIA said in the STEO.
“Sanctions on Iran’s crude oil, insufficient upstream investment, and limited oil consumption growth in China cap Iran’s oil production beyond this limited growth,” the EIA added.
IEA OMR
In its latest oil market report (OMR), the International Energy Agency (IEA) stated that world oil supply growth is “exceeding expectations”.
“Fears that the war between Israel and Hamas would escalate into a wider regional conflict, disrupting oil supply flows, have yet to materialize,” the IEA said in its November OMR.
“Barring large unforeseen outages, world oil supply is firmly on an upward trajectory, with October output up 320,000 barrels per day month on month,” the IEA added.
“Record output from the United States, Brazil and Guyana underpin this year’s 1.7 million barrel per day increase in global oil supplies, to a record 101.8 million barrels per day. In 2024, non-OPEC+ producers will continue to lead global growth, projected at 1.6 million barrels per day, to an unprecedented 103.4 million barrels per day,” the IEA continued.
“A temporary easing of U.S. sanctions on Venezuela in late October is expected to have only a marginal impact on supply, as production increases from the country’s battered oil sector will take time and investment,” the IEA went on to state.
In its previous OMR, which was released in October, the IEA projected that global output would increase by 1.5 million barrels per day in 2023 and 1.7 million barrels per day in 2024.
“Global supply growth this year and next, of 1.5 million barrels per day and 1.7 million barrels per day, respectively, is dominated by non-OPEC+ producers,” the IEA stated in that OMR.
“As for the OPEC+ bloc, the supply story this year is one of contraction, although Iran is on course to rank as the world’s second biggest source of growth after the United States. Voluntary cuts are expected to keep the oil market in deficit as OPEC+ could pump 1.3 million barrels per day below the call on its crude in 4Q23,” it added.
“If extra cuts are unwound in January, the balance could shift to surplus, which would go some way to help replenish depleted inventories. Observed global oil stocks tumbled by 63.9 million barrels in August, with crude oil down by a massive 102.3 million barrels,” it continued.
To contact the author, email andreas.exarheas@rigzone.com
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