The International Energy Agency (IEA) stated on Wednesday that the relaxation of Covid-19 restrictions in China is expected to push global oil demand to a new record high this year, while price cap sanctions against Russia could reduce supply.
According to the Paris-based energy watchdog’s monthly oil report, “two wild cards dominate the 2023 oil market outlook: Russia and China.”
“Russian supply slows under the full impact of sanctions (while) China will drive nearly half this global demand growth even as the shape and speed of its reopening remains uncertain.”
In the OECD developed countries, weak industrial activity and warm weather contributed to a drop of about a million barrels per day in oil consumption in the fourth quarter of 2022.
While Europe and the United States may experience mild recessions, China’s anticipated reopening will likely spur economic growth in neighboring Asian countries and push China beyond India as the world’s fastest-growing oil consumer.