Surprises of 2023 Volume 2: Oil Demand, With or Without EVs

We forecast global crude oil demand growth of 2.5 million barrels per day in 2023, anchoring the high end of estimates. We don’t expect a recession in 2023, and historically it takes big recessions to really dent crude demand. The greatest shortfall from trend for demand is among emerging markets, which have been the last to fully open up from the Covid lockdowns. With China’s abandonment of its “Zero Covid” policies, the industrial and tourism ecosystem of emerging markets will come back to life. Growth in electric vehicles will have no effect on crude oil demand growth outside of rounding error – the share of EVs in the world is just too small to matter. The Biden administration has already begun refilling the SPR, putting in a price floor at about $70. OPEC+ continues to keep supplies tight, despite record low levels of storage, pointing to a price target of $100. Our demand forecast is very out-of-consensus. Our supply and price forecast is in-consensus among clients, but not markets.