(KAPSARC, 21.Nov.2022) — Highlights from KAPSARC‘s fourth quarter of 2022 Oil Market Outlook (KOMO) follow.
Declining gross domestic product (GDP) growth in Q4 2022 will add downward pressure to the underlying seasonality of oil demand trends in several countries, playing an important role in oil demand declines this quarter. OECD countries in North America and Europe are expected to witness overall declines in oil demand as winter sets in. In non-OECD regions, both the Middle East and Eurasia are also expected to witness declines. Nevertheless, both Africa and Asia will counteract these declines, bringing overall demand growth to over 510,000 barrels per day (Kb/d).
OECD Asia, particularly Japan and South Korea, is expected push demand up by 740 Kb/d (460 Kb/d from Japan and 240 Kb/d from South Korea). India is also expected to witness strong demand growth of 410 Kb/d due to its harvest season and religious celebrations. Demand in China is also expected to grow by 360 Kb/d as it intensifies its infrastructure development while also trying to export more diesel to Europe for the winter season, all bolstered by softer COVID-19 restriction expectations.
Since Q3 of this year, global oil demand has finally caught up to its pre-pandemic levels. Overall, we anticipate quarter-on-quarter (QoQ) growth in OECD consumption of roughly 640 Kb/d, while oil demand growth in non-OECD countries is expected to decline by roughly 120 Kb/d.
It is also expected that Europe and several other regions will increase their fuel oil demand this winter. Refineries that were supposed to retrofit to limit their sulfur content according to the IMO 2020 regulations did so two years ago. Several other refineries that have not been retrofitted seem to be in luck this year. This is because the need for switching gas to liquids this quarter has made burning fuel oil for heat and electricity generation profitable; exporting fuel oil with high sulfur content was until recently uneconomic.
The full 51-page KAPSARC report is below.
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