The International Energy Agency (IEA) has released its oil market report, projecting a significant increase in global oil supply, which is expected to reach a new peak of 103.5 million barrels per day (mb/d) in 2024. This surge is primarily driven by unprecedented production levels in the United States, Brazil, Guyana, and Canada.
The growth in oil supply is predominantly attributed to non OPEC+ countries, contributing nearly 1.5 mb/d to the overall increase. In contrast, OPEC+ production is anticipated to remain relatively stable compared to the previous year, assuming the gradual phasing out of additional voluntary cuts initiated in the second quarter of 2024. The report also highlights a narrowing gap in regional refinery profitability, with margins in the Atlantic Basin showing a decline while those in Singapore experience a boost. Refinery crude throughputs are forecasted to average 83.3 mb/d in 2024, surpassing the previous record of 82.5 mb/d set in 2018.
However, a growing disparity is expected between OECD and non-OECD refinery runs, fueled by new capacity coming online in the Middle East, Africa, and China. Russian oil exports witnessed a significant increase, reaching a nine-month high of 7.8 mb/d in December. As 2024 begins, the risk of disruptions in global oil supply due to conflicts in the Middle East remains high, especially concerning oil flows through the Red Sea and the critical Suez Canal. In 2023, approximately 10% of the world’s seaborne oil trade, equating to around 7.2 mb/d of crude and oil products, and 8% of the global LNG trade passed through this vital trade route. The alternative shipping route around Africa’s Cape of Good Hope, which extends voyages by up to two weeks, continues to exert additional pressure on global supply chains, increasing freight and insurance costs.