Oil Market Report - December 2023

14 December 2023 •World oil demand is on track to rise 2.3 mb/d to 101.7 mb/d in 2023, but this masks the impact of afurther weakening of the macroeconomic climate. Global 4Q23 demand growth has been revised downby almost 400 kb/d, with Europe making up more than half the decline. The slowdown is set to continuein 2024, with global gains halving to 1.1 mb/d, as GDP growth stays below trend in major economies.Efficiency improvements and a booming electric vehicle fleet also drag on demand. •US oil supply growth continues to defy expectations, with output shattering the 20 mb/d mark. This,combined with record Brazilian and Guyanese production along with surging Iranian flows will lift worldoutput by 1.8 mb/d to 101.9 mb/d in 2023. Non-OPEC+ will again drive global gains in 2024, projectedat 1.2 mb/d after OPEC+ deepens its voluntary oil cuts. •Russian crude export prices declined sharply in November, with Urals falling below the $60/bbl pricecap on 6 December. The lower prices and a 200 kb/d drop in oil shipments pushed November exportrevenues for crude and products down 17% m-o-m to $15.2 billion, a level not seen since July 2023.Revenues fell more for crude (-$2.4 billion m-o-m) than products (-$800 million). •Refinery margins in Europe and Singapore rebounded marginally in November, but the US Gulf Coastunderperformed again, slipping for the third month running. Weaker diesel and gasoline cracks drovemuch of the US hub’s decline. Global crude runs in 4Q23 are expected to be materially weaker thanpreviously estimated on deeper and longer refinery turnarounds, falling 3.6 mb/d m-o-m in October andonly slowly recovering to a seasonal peak of 84.2 mb/d by December 2023. •Global observed oil inventories declined by 19.6 mb in October. While crude oil inventories were largelyunchanged, oil product stocks fell for the first time in four months, reversing the trend in 3Q23 when oilproduct stocks rose 1.3 mb/d, while crude drew 1.6 mb/d on average. OECD and non-OECD on-landstocks fell by 18.9 mb and 24.2 mb, respectively, while oil on water built by 23.5 mb. •ICE Brent futures continued to fall in November, declining by $5/bbl to $83/bbl. Surging US crude exportsand weaker global demand growth pressured the prompt crude price structure. The WTI contangodeepened. Oil’s bearish drift continued in early December after the 30 November OPEC+ meeting failedto halt the price rout, with Brent prices about $25/bbl below September’s annual high. Table of contents Over a barrel ............................................................................................................................. 3Demand...................................................................................................................................... 4Overview.................................................................................................................................. 4Rampant US NGL supply and China petchem demand surge drive a global realignment........ 6OECD ...................................................................................................................................... 8Non-OECD............................................................................................................................. 11Supply...................................................................................................................................... 16Overview................................................................................................................................ 16Saudi crude exports squeezed by Americas supply wave, Iranian and Russian barrels ........ 17OPEC+ crude supply............................................................................................................. 19OPEC+ members deepen voluntary oil cuts to offset non-OPEC+ gains................................ 20Russian oil export revenues drop sharply as Urals prices slump below its $60/bbl cap ......... 23Non-OPEC+........................................................................................................................... 25Refining ................................................................................................................................... 30Overview................................................................................................................................ 30Product cracks and refinery margins..................................................................................... 31Changing product market dynamics lift European middle distillate premiums ........................ 32Regional refining developments............................................................................................ 38Stocks ...................................................................................................................................... 42Overview.............................................................................................