Novak expects record demand for oil in the world by the end of 2023

This year, global oil demand may become a record, increasing by 2.4 million barrels per day, said Deputy Prime Minister of the Russian Federation Alexander Novak, who oversees the fuel and energy sector, at the Russian Energy Week.

“We are seeing an increase in demand, this year it will be a historical record, if you do not take 2020 at the time of recovery. We expect 2.4 million barrels per day of growth in oil demand,” he said (quote according to TASS).

In the future, Novak also expects an increase in oil consumption in the world, in 2030 the figure will be 116-118 million barrels per day. This means, according to his assessment, that in the current conditions it is important to ensure an increase in consumption of investment resources, otherwise the world may face a shortage of capacity. Now in OPEC+ countries, which have reduced production, there is free capacity in the amount of 4-5 million barrels per day, the Deputy Prime Minister added.

Earlier in June, the International Energy Agency also predicted an increase in global oil demand in 2023 by 2.4 million barrels per day. In July, Goldman Sachs also predicted record demand in the oil market in the second half of 2023, which will lead to an increase in Brent oil prices to $86/barrel.

On September 5, Russia announced that the reduction in oil exports by 300,000 barrels per day would be extended until the end of 2023. Novak explained then that the reduction volumes would be adjusted monthly “depending on the situation on the global oil market.” From March of this year until the end of 2024, the Russian Federation is also voluntarily reducing oil production by 500,000 barrels per day. In addition, in August Russia decided to reduce exports by 500,000 barrels per day, in September – by 300,000 barrels. This reduction does not apply to agreements under the OPEC+ deal.

Eight more OPEC+ countries also joined the voluntary reduction in oil production, including Russia’s main partner Saudi Arabia. The Kingdom reduced oil production by 500,000 barrels per day from May 1, and by another 1 million barrels from July until the end of the year.

As Vedomosti previously wrote, the government raised the forecast export price of Urals oil for the next three years. According to the explanatory note to the draft federal budget for the next three years, the average export price for Russian oil in 2023 will be $63.4/barrel. The price forecast for 2024 has been increased by 6% compared to the parameters of the current federal budget for 2023–2025. to $71.3/barrel, for 2025 the price increased by 8% to $70.1/barrel. In 2026, the government expects the Urals price to be $70/bbl.