Report: Recession to bite global oil demand worse than IEA, OPEC predict

(WO) – Global oil demand in 2023 will grow about a million barrels per day lower than organizations such as the International Energy Agency (IEA) and OPEC have forecast, according to a new report from Enverus Intelligence Research (EIR).

The EIR report looks at near-term global oil demand, correlations between gross domestic product (GDP) and oil demand, and the impacts of a possible recession on oil demand. It also explains why its estimate for global oil demand growth in 2023 remains sharply lower than the IEA and OPEC estimates.

The consensus estimate for 2023 oil demand growth calls for an increase of 1.7-2.0 MMbbl/d over 2022 demand, the report notes.

“While we don’t anticipate a repeat of the 2008 recession, we assess the consensus estimate for 2023 oil demand growth as optimistic, especially compared to historical analogues,” said Bill Farren-Price, the report’s author and a director at EIR. “We instead forecast oil demand growth of 1.0 MMbbl/d Y/Y for 2023.

“Our analysis shows that China, India and non-OECD Asia are the largest components of oil demand growth in 2023, with other regions offering negative or marginal growth at best,” Farren-Price said.

While the International Monetary Fund’s (IMF) GDP forecasts underpin its oil demand model, the EIR report says the IMF in 2008-09 was late in forecasting recession and light in its expectations for the pace of recovery.  Medium-term growth was also below the Fund’s forecasts during the recovery phase.

Contributing to the slower-growth projections, EIR noted, roughly half of global oil demand is consumed by the transport sector, where energy transition is accelerating. 

Enverus Intelligence Research is a registered investment adviser that publishes energy-sector research focused on the oil and natural gas industries. It is a subsidiary of Enverus, the energy-dedicated SaaS platform.