Live Market News

Oil markets to face ‘serious problems’ as demand rises: IEF

Latest Market News
1 of 301

Oil prices are expected to increase in the second half of 2023, according to the International Energy Forum.

Christopher Furlong | Getty Images News | Getty Images

Oil prices are set to rise in the second half of the year as supply struggles to meet demand, according to the Secretary General of the International Energy Forum. 

Oil demand bounced back to pre-Covid levels quickly, “but supply is having a tougher time in catching up,” said Joseph McMonigle, secretary general of the International Energy Forum, adding that the only factor moderating prices right now is the fear of a looming recession. 

“So, for the second half of this year, we’re going to have serious problems with supply keeping up, and as a result, you’re going to see prices respond to that,” McMonigle told CNBC on the sidelines of a meeting of energy ministers from the group of the 20 leading industrial economies (G20) in Goa, India, on Saturday. 

McMonigle attributes the push in oil prices to increasing demand from China — the world’s largest importer of crude oil — and India. 

“India and China combined will make up 2 million barrels a day of demand pick-up in the second half of this year,” the Secretary General said. 

China and India's oil demand will rise by 2 million barrels per day in the second half of 2023: IEF

Asked if oil prices could once again spike to $100 a barrel, he noted that prices are already at $80 per barrel and could potentially go higher from here. 

“We’re going to see much more steep decreases in inventory, which will be a signal to the market that demand is definitely picking up. So you’re going to see prices respond to that,” McMonigle said. 

However, McMonigle is confident that the Organization of the Petroleum Exporting Countries and its allies — collectively known as OPEC+ — will take action and increase supply, if the world eventually succumbs to a “big supply-demand imbalance.”

“They’re being very careful on demand. They want to see evidence that demand is picking up, and will be responsive to changes in the market.” 

 Brent crude futures with September expiry last settled at $81.07 per barrel on the Friday close, while West Texas Intermediate crude with September delivery ended the trading day at $76.83. 

No room for complacency 

McMonigle also spoke about the liquified natural gas market, crediting the stability in Europe’s energy market to a warmer-than-expected winter in 2022. 

“The weather was probably the luckiest thing to have happened,” he said, but warned that “it’s not just this winter, [but] the next couple of winters” that could be rocky.

Global policymakers cannot turn complacent just because LNG prices have fallen, and more investment in renewable energy is needed to ensure the lights continue to stay on, he said.

The LNG-fueled container ship “Containerships Borealis” of the shipping company Borealis moored in the port at HHLA’s Burchardkai terminal.

Picture Alliance | Picture Alliance | Getty Images

Once “whispered” about, energy security has now become the main focus of summits such as the G20, McMonigle signaled.

“We definitely…

Read More:
Oil markets to face ‘serious problems’ as demand rises: IEF

Leave a comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Thank you for subscribing.

Something went wrong.