Vitol, the world’s largest independent oil trader, has said that global oil market may be fairly balanced with a slight surplus next year as demand exceeds expectations.
The Global Head of Research at Vitol, Giovanni Serio, was quoted by Reuters as saying that oil demand globally has exceeded 2019 levels and is expected to continue growing as oil intensity – the volume of oil consumed per unit of Gross Domestic Product (GDP) – for most economies has returned to pre-pandemic levels.
Supply, on the other hand, he said, needs to be constrained given additional cuts from major producers such as Saudi Arabia, despite low investments in recent years.
Production growth from non-members of the Organisation of Petroleum Exporting Countries (OPEC) has also surpassed previous highs and continues to grow, while output from Nigeria has surprised on the upside, he added.
“Demand is at 2.3 million barrels per day higher than 2019 and the Saudis have to give a lollipop producing at 9 million barrels per day to balance the market,” Serio said.
He added that demand has exceeded expectations and supply needs to be constrained at a level that is only marginally higher than the level of Saudi production during COVID-19.
Global crude price Brent has weakened to just above $82 a barrel from a 2023 high in September near $98. Concern about economic growth and demand has pressured prices, despite support from supply cuts by OPEC and its allies, and conflict in the Middle East.
