DEMAND WEAKNESS COULD BE THE REAL OIL PRICE CAP IN 2023

Paul Hickin, director at S&P Global Commodity Insights explains how changing demand for crude oil could impact the next 12 months. The global oil supply map may be reshaped indefinitely after the fallout from the Russian invasion of Ukraine and subsequent G7 sanctions and price cap on Russian crude. But the potential impact from the downturn in demand may be even bigger, given uncertainty over the consumption picture in China as well as broader economic weakness globally. Volatility is likely to be the only constant in 2023. Oil demand is being simultaneously challenged by Covid-related lockdowns in key consumer China in the East, and by slowing economies in the West, exacerbated by inflationary pressure and higher interest rates. DEMAND IN ASIA S&P Global Commodity Insights analysts predict that oil demand will increase by an average of 2.3 million b/d on the year in 2022, with growth moderating to 2.0 million b/d in 2023. This is a far cry from the outlook in early 2022, when booming oil prices saw the S&P GSCI key commodity index hit record highs, with the prospect of a new supercycle. But much still hangs on China, which has been adversely impacted by its...