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According to the International Energy Agency, the global oil supply and demand are expected to increase. A high rise of about 1.3 billion barrels per day is predicted to be seen in the first four months of 2024. In February, the crude oil prices increased by USD3.4/bbl m-o-m to USD83.48/bbl. It is due to the economic growth in America and supply chain issues in West Asia. Let us read more about the reasons and their impact.

• Global Oil Demand Elevation

This demand increased in Europe m-o-m by 0.9 MMb/d and China by 0.5 MMb/d. Whereas, globally the request for liquid energy demand rose from m-o-m by 2.6 MMb/d to 102.9 MMb/d.

• Production of Oil by OPEC 10

OPEC 10 (The Organization of the Petroleum Exporting Countries) countries stably produce 26.7 MMb/d while OPEC+ nations decided for voluntary cuts of 2.2 MMb/d from May to August of this year. The list excludes Iran, Venezuela and Libya.

• Oil Production by Iran, Venezuela and Libya

The average production of oil by these three nations is ~5.2 MMb/d. It was a good production increase by all three nations. In the month of February, a marginal change of only 0.2 MMb/d was noticed as well.

• Production of Oil by Non-OPEC

Non-OPEC nation’s oil production was slightly reduced. The decreased value is by 0.4 MMb/d m-o-m to 60.3 MMb/d. This shift was due to Brazilian offshore whose decline was m-o-m 0.2 MMb/d. The list does not include US shale.

• Production of Oil by US Shale

After a huge downfall in the first month of this year due to extreme weather conditions, US shale oil production recovered to 9.7 MMb/d. In a cold month, some firms even got shut down. It resulted in a decline of 0.5-MMb/d. Luckily, now it has gained by 0.4-MMb/d. Besides, US Shale also increased the number of rigs in operation pointing to better production in the upcoming time.

• Commercial Inventories (Non-OPEC countries involved)

A high decrease has been noticed in oil inventories owned by commercial firms. It has reduced by approximately 32 million barrels to 4.5 billion barrels in the first month of 2024. This huge change is mainly accredited to OCED (Organization for Economic Co-operation and Development) countries. Due to low inventory stock and high demand, oil prices are rising.

• Market Sentiments on Global Oil Supply and Demand

The Brent crude oil prices are increasing. Some conflicts in West Asia is is considerd as one of the significant reasons of price rising. After a missile attack on an oil vessel, oil tankers changed their route. Some companies also paused their delivery, and supply chain after the casualty occurred in the mid of February. Thus, the prices were extremely high in that month. Besides, OPEC+ countries also cut the supply causing further price elevations.