The latest OPEC+ voluntary curbs of 1.16 mb/d come on top of an announced 500 kb/d cut in Russian output from March that has now been extended through the rest of the year, and a 2 mb/d reduction in targets taking effect last November. This augurs badly for the economic recovery and growth. Consumers confronted by inflated prices for basic necessities will now have to spread their budgets even more thinly. While gasoil cracks have eased, those for gasoline continue to trend higher. The apparent weakness in industrial activity is impacting gasoil demand, whereas the services sector and personal consumption are driving gasoline and jet uptake. The bloc’s self-described “precautionary move” immediately triggered a $7/bbl jump in North Sea Dated crude to $85/bbl, up nearly $15/bbl from March lows. Surprise OPEC+ supply cuts announced on 2 April risk aggravating an expected oil supply deficit in 2H23 and boosting oil prices at a time of heightened economic uncertainty, even as industrial activity slows in the world’s largest economies and production growth outside the alliance appears robust. ![]() At the time of writing, Brent futures traded at $87/bbl. Surprise OPEC+ production cuts announced in early April added further momentum to the rebound. ICE Brent oil futures slumped to a 15-month low of $71/bbl in mid-March due to financial market instability but then recovered as banking stress waned and expectations of Federal Reserve interest rate cuts later this year increased.Preliminary data for the US, Europe and Japan show a hefty 38.9 mb decline in March. OECD commercial stocks built by 9.6 mb, narrowing the deficit against the five-year average to 7.5 mb. Oil on water and non-OECD stocks fell by 11.5 mb and 2.1 mb, respectively, while total OECD inventories rose by 8.8 mb. Global inventories held largely steady in February after surging by 58 mb in the previous month.Estimated oil export revenues rebounded by $1 billion to $12.7 billion but were 43% lower than a year ago. Total oil shipments rose by 0.6 mb/d to 8.1 mb/d, with products climbing 450 kb/d m-o-m to 3.1 mb/d. Russian oil exports in March soared to the highest since April 2020 thanks to surging product flows that returned to levels last seen before Russia invaded Ukraine.On average, 2023 crude runs will approach pre-covid levels but remain 0.3 mb/d below 2019 average throughputs. Annual gains will double to 2.1 mb/d from 1Q23 to 2Q23, as runs in the US normalise and with Chinese activity materially higher than a weak 2Q22 baseline. Global refining throughput is forecast to average 82 mb/d this year, 0.1 mb/d lower than in last month's Report due to weaker 1Q23 data.Non-OPEC+, led by the US and Brazil, drives the 2023 expansion, rising 1.9 mb/d. For the year as a whole, global oil production growth slows to 1.2 mb/d versus 4.6 mb/d in 2022. From March-December, gains of 1 mb/d from non-OPEC+ fail to offset a 1.4 mb/d decline from the producer bloc. Extra cuts by OPEC+ will push world oil supply down 400 kb/d by end-2023.Jet/kerosene accounts for 57% of 2023 gains. ![]() OECD demand, dragged down by weak industrial activity and warm weather, contracted by 390 kb/d y-o-y in 1Q23, its second consecutive quarter of decline. Reflecting the widening disparity between regions, non-OECD countries, buoyed by a resurgent China, will account for 90% of growth.
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