World record for oil demand broken! Raw material prices may remain high

According to the August report of the International Energy Agency (IEA) oil demand in the world has never been as big as it is now and may continue to grow this summer. This may be conducive to high oil prices on global markets and a reduction in the base for further progress in disinflation.

Record demand for oil

Global demand for oil is at record highs, fueled by strong summer air traffic, increased use of oil in energy and growing Chinese petrochemical activity. Global oil demand is expected to grow by 2,2 mb/d to 102,2 mb/d in 2023, with China accounting for more than 70% of the increase. In June alone, however, a world record was broken, where the demand for oil reached the level of 103 mb/d in June, and August may bring another peak.

Global oil supply

Global oil supply fell by 910 kb/d to 100,9 mb/d in July. Global oil production is expected to increase by 1,5 mb/d to a record high of 101,5 mb/d in 2023, with the US driving growth outside OPEC+ of 1,9 mb/d. Thus, there is a possibility that the imbalance on the oil market will continue, where demand may start to exceed supply. While earlier the United States was able to drive oil prices down by releasing strategic reserves, now their level is the lowest since the 80s, so the possibilities are smaller. The only way to bring oil prices down seems to be a decrease in demand, which ultimately means an economic slowdown. However, until the current prices are tolerated, their further increase cannot be ruled out.

OPEC+ restrictions

In July, oil supply from the alliance OPEC + fell by 1,2 mb/d to a nearly two-year low, mainly due to voluntary reductions by Saudi Arabia, as well as production cuts by Russia. As a result of the imbalance in the market, the price of the raw material increased. Since the low at the end of June, oil prices have increased by more than 20%, the effects of which we have seen in the CPI inflation data.

Brent Oil (CFD) Chart. CMC Markets platform Next Generation.