IEA forecasts record demand for oil this year

The rapid reopening of China, after years of lockdowns motivated by the covid-19 pandemic, is expected to help global demand for oil reach a record level this year, according to the International Energy Agency (IEA).

In a monthly report published this Wednesday (18), the IEA raised its projection for a rise in world oil consumption in 2023 by almost 200,000 barrels per day (bpd), to 1.9 million bpd. The extra demand means the agency now expects total oil demand to hit an unprecedented average of 101.7 million bpd this year, well above pre-pandemic levels.

The abrupt reversal of the “covid zero” policy in China took the markets by surprise and stoked hopes that the reopening will lead the Asian giant’s demand for oil to show a strong recovery.

Improved economic prospects in Europe and the US also boost expectations for oil consumption, highlighted the IEA. Europe is expected to perform better this year economically than initially thought, as a milder winter eased the energy crisis triggered by Russia’s war in Ukraine. At the same time, efforts by the Federal Reserve (Fed, the US central bank) to fight inflation are showing signs of results.

The IEA raised its forecast for Chinese oil consumption this year by 100,000 bpd to 15.9 million bpd.