Oil demand will hit a new record in 2023, driving up prices as supply declines, IEA says

• Global oil demand is expected to hit a new record this year, spelling trouble for crude prices.
• The IEA estimated oil demand could hit 101.9 million barrels per day in 2023.

Global oil demand is expected to notch a new record this year – and that could spell trouble for crude prices, which are already facing upwards pressure from supply cuts, the International Agency said in a recent report.

The energy watchdog predicted the world's crude oil demand would jump to a record 101.9 million barrels a day in 2023, up by 2 million barrels a day from last year.

Developing economies could account for 87% of the expected demand growth this year, the IEA said, while China alone could account for at least half as its economy continues to reopen.

Meanwhile, the global supply of oil is still under stress. OPEC+ announced a surprise production cut earlier this month of over 1 million barrels a day. Russia, which is a member of OPEC+, said it would extend its cut of 500,000 barrels a day cut through mid-2023.

"Our oil market balances were already set to tighten in the second half of 2023, with the potential for a substantial supply deficit to emerge. The latest cuts risk exacerbating those strains, pushing both crude and product prices higher. Consumers currently under siege from inflation will suffer even more from higher prices, especially in emerging and developing economies," the IEA said.

Oil prices briefly spiked into the triple-digits last year as Russia's invasion of Ukraine created chaos in markets. Prices have since eased, but the new cuts from OPEC+ would likely more than counteract any non-OPEC+ production increases this year, the IEA said.

West Texas Intermediate crude is up 2.4% year to date, and Brent crude, the international benchmark, is up 1.6%.