In the wake of Saudi Arabia’s recent announcement to extend its voluntary one million barrels per day (b/d) production cut through the end of this year, the US Energy Information Administration (EIA) anticipates a reduction in global oil inventories for the period, leading to potential upward pressure on oil prices.
According to the September edition of the Short-Term Energy Outlook (STEO) by the EIA, a decline of 200,000 b/d in global oil inventories is foreseen in the fourth quarter of 2023. Additionally, the EIA’s forecast suggests that the Brent crude oil spot price is likely to average US$93 per barrel (bbl)during the same period.
However, the report also projects a price decrease for 2024, with an annual average of US$88/bbl. This expected inventory accumulation in the coming year can be attributed to several factors, including a slowdown in oil demand growth, increased non-OPEC oil production, and the conclusion of Saudi Arabia’s voluntary production cuts.
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The EIA’s forecasts indicate that global liquid fuel production is set to increase by 1.2 million b/d in 2023, despite recent voluntary production cuts by OPEC. Furthermore, the global production outlook in the EIA’s forecast indicates a growth of 1.7 million b/d in 2024.
Notably, non-OPEC production is the primary driver of this global production growth, with an increase of two million b/d in 2023 and 1.3 million b/d in 2024, led by countries such as the United States, Brazil, Canada, and Guyana.
Russia’s production is expected to decline by an average of 300,000 b/d this year and remain relatively stable in 2024. In contrast, OPEC crude oil production is forecasted to decrease by 800,000 b/d in 2023 and then increase by 400,000 b/d in 2024, reflecting changes in the global oil landscape.
