Things could get rougher in the global energy markets next year
So much for demand destruction: The global energy crunch isn’t ending anytime soon if the International Energy Agency’s (IEA) latest outlook is anything to go by. Despite a growing chorus of voices warning of recession in some of the world’s largest economies, the energy think tank is forecasting global oil demand to surpass pre-pandemic levels next year as the Chinese economy bounces back from covid lockdowns. Supply will “struggle” to meet the step up in demand, which will rise 2% to 101.6 mn bbl/day, the IEA said in its latest monthly report.
Supply will also head in the wrong direction as embargoes and sanctions on Russian hydrocarbons and falling output in producers outside the Middle East cancel out supply growth elsewhere. “Global oil supply may struggle to keep pace with demand next year, as tighter sanctions force Russia to shut in more wells and a number of producers bump up against capacity constraints,” the IEA said.
No relief: Oil prices won’t be heading lower in 2023 should the IEA’s forecast come to pass. Prices have already surged to near-record highs this year in response to the war in Ukraine, and a widening in the supply-demand gap will only put more pressure on global benchmarks.
The silver lining: This isn’t a consensus view. OPEC sources said this week that demand growth could slow in 2023 as surging inflation weighs on the global economy.
Also worth noting:
- Russia is raking in the oil money: Russian oil revenues jumped to around USD 20 bn last month, up 11% from April, as heightened oil prices offset falling export volumes. (Bloomberg)
- Oman wants in the Gulf IPO boom: Oman is considering IPOing two units of state-owned energy firm OQ and a manufacturing company under a plan by the country’s investment authority to exit state assets. This could be the biggest listing in the country since 2010 if it goes ahead. (Bloomberg)
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THE CLOSING BELL-
The EGX30 fell 0.1% at yesterday’s close on turnover of EGP 813 mn (3.2% above the 90-day average). Foreign investors were net sellers. The index is down 16.6% YTD.
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