Tag Archives: Oil Prices

Oil Prices Predicted to Rise in 2nd Half of 2023

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A recent report by Reuters says that global oil supply will exceed demand until mid-2023 when a steep rise in demand is expected, exceeding supply. The IEA’s Oil Market Report, January 2023, predicts record high demand for oil at 101.7 million bpd, an increase of 1.9 million bpd. Almost half of the demand growth for oil will result from China relaxing its regulations on COVID. Jet fuel will be the largest source of growth.

According to IEA, while Russian oil exports to the EU decreased, their diesel exports to EU surged-

Russian oil exports fell by 200 kb/d m-o-m in December to 7.8 mb/d, as crude shipments to the EU declined after the EU crude embargo and G7 price cap came into effect. Russian diesel exports surged to a multi-year high of 1.2 mb/d, of which 720 kb/d was destined for the EU.

From 50,000 ft it appears that the embargo of Russian crude oil into western refineries is somewhat offset by increased Russian diesel exports to EU. The EU is competing with increased imports of Russian diesel.

Oxy CEO on Oil Production

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The CEO of Occidental Petroleum, Vicki Hollub, said an interesting thing last week as reported by Reuters. The article begins with a quote by Hollub.

“HOUSTON, May 11 (Reuters) – Oil companies worldwide have been trying to increase production, but are struggling to balance increases without undercutting shareholder returns, Occidental Petroleum (OXY.N) Chief Executive Officer Vicki Hollub said on Wednesday.” [Italics mine]

The effect on executive decision makers of “undercutting shareholder returns” is not to be underestimated. When margins are high, why voluntarily reduce them with increasing production?

She goes on to say-

“”It is almost value destruction if you try to accelerate anything now,” Hollub said during a conference call to discuss the company’s first quarter results.”

Everyone knows there is widespread public anger and distrust simmering on the matter of high gasoline prices in the US. Fuel prices are at a reported 14 year high and are helping to drive inflation. Everyone is feeling the pain either directly as a tank full of 85 octane or in the inflated price of widgets elsewhere.

Oil producers are feeling the heat but are reluctant to increase production. Hollub said “There are a lot of headwinds to increasing production worldwide,”

Unfortunately, the only market lever consumers have is to reduce fuel consumption.

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