According to the U.S. Energy Information Administration (EIA) website article published in April 2023, on April 3, OPEC and partner countries (OPEC+) announced plans to cut crude oil production by 1.2 million barrels per day (b/d) through the end of 2023. In March, OPEC produced less than its previous targets, and in our March STEO, we had assumed that OPEC production would fall further below the prior production targets in the coming month. Because we had already accounted for some of the reduction in crude oil output from OPEC countries subject to the cuts, we have reduced our forecast for OPEC’s crude oil production from the second quarter of 2023 (2Q23) through 4Q23 by around 0.5 million b/d. We now expect OPEC’s crude oil production will fall by an average 0.4 million b/d this year compared with last year.
These production cuts were in addition to Russia’s 0.5 million b/d cut that it previously announced would begin in March. Despite this announcement, the observable impact on Russia’s liquids production and exports in the latest available data has been less significant than expected. Although we still expect Russia’s production to fall this year, Russia’s production outpaced our earlier expectations because its exports have continued to find buyers in markets outside of Europe. We forecast Russia’s petroleum and other liquids production will decline from 10.9 million b/d in 2022 to 10.6 million b/d in 2023 and to 10.4 million b/d in 2024, which are both about 0.3 million b/d more than we forecast in last month’s STEO.
Although our forecast includes declining production in OPEC and Russia, we expect global liquids fuel production will increase by 1.5 million b/d in 2023 because of strong growth from non-OPEC countries, which (excluding Russia) increase by 2.3 million b/d in our forecast. Non-OPEC production growth is largely driven by countries in North and South America, as highlighted in our latest STEO Between the Lines.
Global liquids production rises by an additional 2.0 million b/d in 2024 in the forecast, driven by nonOPEC production growth of 1.0 million b/d and by OPEC crude oil production, which we expect to increase by 0.9 million b/d when current production cuts expire at the end of 2023.
Global oil demand and prices
We forecast that global liquid fuels consumption will rise by 1.4 million b/d in 2023 and by 1.8 million b/d in 2024. Our forecast for global liquid fuels consumption is unchanged from last month’s outlook. However, increasing risks in the U.S. and global banking sectors increases uncertainty about macroeconomic conditions and their potential effects on liquid fuels consumption, which increases the possibility of liquid fuels consumption being lower than our current forecast.
We expect global oil markets will be in relative balance over the coming year. Global oil inventories, which increased by 0.4 million b/d in 2022 and by 1.1 million b/d in 1Q23, will be mostly unchanged during the second half of 2023 (2H23) . We expect builds will average about 0.5 million b/d beginning in 2024. This forecast assumes the recent OPEC cuts expire at the beginning of 2024.
Given our forecast of relatively balanced oil markets in 2H23, we expect prices will average $86 per barrel (b) for the rest of 2023. That price is similar to the April 6 closing spot price for Brent, which was almost $87/b, as reported by Refinitiv. In 2023, we assess that the most uncertainty in our oil price forecast comes from less-than-forecast economic and oil demand growth.
We forecast Brent prices will average $81/b in 2024 with downward price pressures emerging in 2Q24, when we expect global oil inventories will begin to build more significantly. However, because these builds depend on OPEC increasing its crude oil production, uncertainty in the forecast for this period comes from less oil production than we forecast, which could result in higher prices than in our forecast.
