Oil Market Report - August 2023

11 August 2023 •World oil demand is scaling record highs, boosted by strong summer air travel, increased oil use inpower generation and surging Chinese petrochemical activity. Global oil demand is set to expand by2.2 mb/d to 102.2 mb/d in 2023, with China accounting for more than 70% of growth. With thepost-pandemic rebound running out of steam, and as lacklustre economic conditions, tighter efficiencystandards and new electric vehicles weigh on use, growth is forecast to slow to 1 mb/d in 2024. •Global oil supply plunged by 910 kb/d to 100.9 mb/d in July. A sharp reduction in Saudi production inJuly saw output from the OPEC+ bloc fall 1.2 mb/d to 50.7 mb/d, while non-OPEC+ volumes rose310 kb/d to 50.2 mb/d. Global oil output is projected to expand by 1.5 mb/d to a record 101.5 mb/d in2023, with the US driving non-OPEC+ gains of 1.9 mb/d. Next year, non-OPEC+ supply is also set todominate world supply growth, up 1.3 mb/d while OPEC+ could add just 160 kb/d. •Refinery throughputs are set to reach a summer peak of 83.9 mb/d in August, up 2.4 mb/d since Mayand 2.6 mb/d higher than a year ago. The increase in refined product output has failed to ease productmarket tightness, pushing gasoline and middle distillate cracks to near record-highs. High sulphur fueloil cracks provided further support to margins, which pushed above 2022 levels in July. •Russian oil exports held steady at around 7.3 mb/d in July, as a 200 kb/d decline in crude oil loadingswas offset by higher product flows. Crude exports to China and India eased m-o-m but accounted for80% of Russian shipments. Higher oil prices, combined with narrowing discounts for Russian grades,pushed estimated export revenues up by $2.5 bn to $15.3 bn, $4.1 bn below year-ago levels. •Global observed oil inventories declined by 17.3 mb in June, led by the OECD. Non-OECD stocks andoil on water were largely unchanged. OECD industry stocks fell by 14.7 mb, in line with the seasonaltrend, to 2 787 mb. Industry stocks were 115.4 mb below the five-year average, with product inventoriesparticularly tight. Preliminary data suggest global inventories drew further in July and August. •ICE Brent futures rallied by $11/bbl to $86/bbl in July as macroeconomic sentiment improved markedlywith inflation easing. Tightening physical balances in the wake of Saudi output cuts and lower Russianloadings added additional momentum to the price rebound, pushing crude forward curves deeper intobackwardation. At the time of writing, Brent traded around $87/bbl, close to 2023 highs. Table of contents Tightening up............................................................................................................................ 3 Demand...................................................................................................................................... 4 Overview.................................................................................................................................. 4OECD ...................................................................................................................................... 6Non-OECD............................................................................................................................... 9 Supply...................................................................................................................................... 14 Overview................................................................................................................................ 14The offshore rig market enters a new growth cycle ................................................................. 15OPEC+ crude supply............................................................................................................. 16Russian oil export revenues surge higher in July despite unchanged volumes ...................... 19Non-OPEC +.......................................................................................................................... 22 Refining ................................................................................................................................... 26 Overview................................................................................................................................ 26Product cracks and refinery margins..................................................................................... 28Regional refining developments............................................................................................ 32 Stocks ...................................................................................................................................... 36 Overview................................................................................................................................ 36Implied balance ..................................................................................................................... 37Rece