Saudi Arabia’s oil demand growth to moderately decelerate to 20,000 bpd in 2023: KAPSARC report

RIYADH: Saudi Arabia is expected to keep its oil demand growth moderately low to 20,000 barrels per day in 2023 from this year’s projected demand growth of 24,000 bpd, as the Kingdom continues on its path toward achieving energy efficiency, limiting oil demand, according to a report by the King Abdullah Petroleum Studies and Research Center.

The report titled “KAPSARC Oil Market Outlook Q3,” predicts that the Kingdom is expected to witness a quarter-on-quarter demand growth of 380,000 bpd in the third quarter.

The total global oil consumption is expected to increase by 2.15 million bpd year-on-year in 2022 to hit 99.8 million bpd, as the world recovers from the pandemic, it added.

The KAPSARC report, however, noted that this projection is 320,000 barrels less than its previous projection made in the second quarter of 2022.

“Consumption growth is led by Saudi Arabia, with an expected additional 380,000 bpd for cooling and electricity generation, followed by the US with an expected growth of 320,000 bpd due to its summer driving season,” the report said.

It predicted that the global oil consumption is expected to grow by a further 2.16 million bpd in 2023, 30,000 bpd more than KAPSARC’s previous projection made during the second quarter.

“Despite great uncertainty in oil markets, a reduction in expected supply from Russia, and a reduction in global demand since our previous quarterly outlook, we expect oil supply growth to continue in 2022, with production coming close to parity with demand in 2022 and exceeding it in 2023,” said KAPSARC in the report.

It added: “Though current high oil prices should encourage greater production and less consumption, supply risks are largely to the upside and demand risks are mainly to the downside, both of which would push prices lower.”

On supply balances, the report anticipates a significant quarter-on-quarter growth of 1.61 million bpd in the Organization for Economic Co-operation and Development countries for the third quarter.

KAPSARC, however, noted that oil demand growth in non-OECD countries is expected to slow down in the third quarter to roughly 250,000 bpd.

According to the report, the supply side will witness a 2.2 million bpd growth in the third quarter of 2022, the highest level of quarter-on-quarter growth in several years.

The production growth for the third quarter, however, is only projected to be 870,000 bpd, and surprisingly, non-OPEC+ will represent 68 percent of that production growth.