Global oil demand expected to receive a significant boost due to the resumption of air travel and reopening of China’s economy

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15th March 2023 – (London) According to the International Energy Agency’s (IEA) monthly oil report, global oil demand is slowly increasing, but it is expected to receive a significant boost due to the resumption of air travel and the reopening of China’s economy following COVID-19 restrictions. The Paris-based agency stated that global oil demand growth started in 2023 with a weak start but is projected to end the year strongly.

The IEA predicts that rebounding jet fuel use and a resurgent China will result in an overall increase of 3.2 million barrels per day (bpd) from the first quarter to the fourth quarter, marking the largest relative in-year increase since 2010.

The agency maintained its previous month’s forecasts for Chinese and global demand at 16 million bpd and 102 million bpd, respectively. Although oil supply is still outstripping demand, the IEA expects the market to balance by mid-year, with China and developing countries driving demand.

However, the IEA warned of potential risks to fuel demand due to high inflation and investor concerns over high-interest rates, which could cloud the economic horizon. The agency also highlighted concerns over the health of the U.S. banking sector, which could pose potential downside risks.

In conclusion, the IEA’s monthly oil report suggests that global oil demand is slowly recovering, but it is set to receive a significant boost from the resumption of air travel and the reopening of China’s economy. However, there are still potential risks to fuel demand due to high inflation, high-interest rates, and concerns over the U.S. banking sector.