The demand for oil is going up to a historical record level later this year, according to a monthly report from the International Energy Advisor IEA.

China's elimination of covid-19 restrictions is cited as a decisive factor.

Demand for oil is expected to increase later this year when China's economy has worked its way through the consequences of almost three years of covid-19 shutdowns. Archive image.
Demand for oil is expected to increase later this year when China's economy has worked its way through the consequences of almost three years of covid-19 shutdowns. Archive image.

The IEA forecast is that demand increases by 1.9 million barrels a day this year, up to a record 101.7 million barrels a day.

However, the supply is expected to exceed demand by around 1 million barrels per day during the first three months of the year, but then demand picks up in China.

China must first get through what is expected to be some tough months economically and both headwind and headwind on the way out of almost three years of covid-19 restrictions, according to the IEA.

Russia continues to produce almost as usual, despite the Ukrainian war. In December, Russian oil production was measured at almost 11 million barrels a day, despite the fact that part of the EU's sanctions against Russian oil products have already entered into force.

In the first quarter of the year – with more sanctions on Russian oil products coming into force – Russian production is expected to fall by 1.5 million barrels a day. This, combined with increased demand in China later this year, can quickly change the conditions between supply and demand in the oil market globally, according to the IEA, which warns against price rises.

Among major producers, the IEA expects oil production to increase in countries such as the USA, Brazil, Norway and Canada this year, while the so-called OPEC-plus countries – including Saudi Arabia and Russia – are expected to reduce production by 870 000 barrels a day.

The price of crude oil on the world market rose sharply in the spring of 2022, in the shadow of the Russian attack on Ukraine. Development peaked in September, after which prices have been pushed downwards and commuted around 80 dollars per barrel this year.

In Wednesday's trade, a forward contract for the delivery of so - called brent oil next month costs just over $87 per barrel, compared to the bottom of December, under $77 per barrel.