Demand for oil globally is expected to reach 100.6 million bbl/d by the end of the third quarter 2022, up 1.9% sequentially from the prior quarter and surpassing levels seen prior to the COVID-19 pandemic, according to a Riyadh-based think tank.

“At 54 million bbl/d, non-OECD countries are expected to account for 53% of that growth,” the King Abdullah Petroleum Studies and Research Center (KAPSARC) revealed last week, citing details from its upcoming KAPSARC Oil Market Outlook (KOMO). 

The quarterly KOMO report leverages Saudi Arabia’s market knowledge to present an objective global oil outlook. The report uses International Energy Agency data and econometric modeling to provide insightful forecasts of supply, demand, risks, balances and pricing. Importantly, KAPSARC offers additional viewpoints to those already voiced by oil giant Aramco and the Saudi Ministry of Energy.

Rising Oil Demand 

KAPSARC expects oil demand in the third quarter to rise across all countries except India despite global headwinds and early signs of a looming recession.

Demand in the U.S. will lead the way and reach 20.6 million bbl/d (21% of demand), driven mainly by gasoline demand ahead of the summer driving season. China will follow with demand of 15.3 million bbl/d (15%) fueled by a relaxation of COVID-19 restrictions, “which translates into a resumption of local transportation activities,” KAPSARC Oil and Gas Program Director Majed Al Suwailem said in the report.

Thereafter, India will follow with demand of 4.8 million bbl/d and then Saudi Arabia with 4.2 million bbl/d.

“As for India, even though [it is projected] to make up the third biggest demand, the country’s anticipated quarter-on-quarter growth is slowed by almost 500,000-600,000 bbl/d owing to its monsoon season,” Al Suwailem said, adding that demand growth in Saudi Arabia was expected to be between 300,000-400,000 bbl/d as the Kingdom looks to satisfy cooling needs during the summer months.

SPR and US Shale Supply

KAPSARC expects oil supply to register net global growth of 2.2 million bbl/d, which includes additions from the U.S. Strategic Petroleum Reserve (SPR). The forecast implies an organic (non-SPR) sequential rise of 0.9% from the prior quarter, the highest quarter-on-quarter rise recorded in several years, with supply expected to reach 99.4 million bbl/d in the third quarter.

U.S. shale supply is expected to rise 2.5% sequentially from the prior quarter to reach 11 million bbl/d, including NGL. Meanwhile, Saudi Arabia’s liquids supply is expected to grow 3.2% sequentially from the prior quarter to reach 12.4 million bbl/d. “This would account for about 60% of total OPEC oil supply growth,” the KAPSARC report stated.

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