Outlook for oil and gas markets for 2023

Key messages:

1. One of the main forces that could shape the demand of oil in 2023 is the lifting of Covid19 restrictions in China, which has caused a rapid spike in Covid cases. Once that wave gets under control, we should expect positive spillover on the Chinese economy and, therefore, demand for oil from the world’s second largest oil consumer. However, the timing is important as one has to consider what is happening outside China.
2. This takes us to the second factor that is the global economic outlook. The International Monetary Fund (IMF) expects that a third of the global economy could enter a recession this year, including the US, China and the EU, which account for nearly 50% of oil consumption in the world. However, no one knows how deep or long that recession will be.
3. Then, there is the geopolitical dimension – primarily the war in Ukraine with no clear end in sight.
4. The mild weather and ample gas storage in Europe has prevented a further deterioration of the energy crisis in the continent.
5. High gas prices have led to a substitution of gas by other fuels for heating, as well as reduced growth in gas demand for industrial usage.
6. Liquified Natural Gas (LNG) has played a major role in easing the crisis.

Dr Nakhle was joined by Bart Cornelissen, Energy, Resources & Industrials Leader at Deloitte.