OPEC said Tuesday that global demand will continue to outpace supply in its outlook for the year ahead, as member countries struggle to increase flows.
In the cartel’s first forecast for 2023, demand is seen increasing by 2.7 million barrels per day, while supplies from non-OPEC sources are expected to grow by 1.7 million barrels per day.
To fill the gap, OPEC would need to increase output to 30.1 million barrels per day next year — 1.38 million barrels more than it pumped in June. OPEC already has plans to keep boosting output gradually this year, but has been falling short of meeting even those quotas, dimming hopes for a production surge that will match next year’s demand.
The forecast comes as President Joe Biden begins a trip to the Middle East on Wednesday. During a stop in Saudi Arabia, he is expected to pressure OPEC’s de facto leader to increase output to alleviate price pressures in the US.
But Saudi Arabia and other top producers like the UAE have little spare production capacity with which to add more supply. Meanwhile, OPEC member Libya has seen output sink amid political unrest while Angola and Nigeria have lost capacity because of significant underinvestment and technical problems afflicting operations.
With little additional supply from OPEC, oil inventories in industrialized countries have dropped to 312 million barrels, below the five-year average.
Still, crude oil prices have come well off highs in recent weeks as fears of
weigh. On Tuesday, West Texas Intermediate, the US benchmark, slipped 5% to $98.76 per barrel.