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08 August 2023

Global Crude Production Outlook for 2023 and 2024: EIA Analysis

The US Energy Information Administration (EIA) has provided insights into the global crude production outlook for 2023 and 2024. As expected, higher oil prices, influenced by Saudi Arabia's extended voluntary production cuts, have created incentives for non-OPEC producers to increase their output. This trend is expected to drive continued growth in global oil production during the next two years.

Leading this surge in production is the United States, projected to surpass 12.9 million barrels per day (b/d) of monthly crude production for the first time in late 2023, according to the EIA's August Short-Term Energy Outlook. The agency has revised its 2023 outlook for US oil production upwards by 200,000 b/d, reaching 12.76 million b/d. Output growth is expected to persist into 2024, with US crude production reaching 13.09 million b/d, a 240,000 b/d increase from the previous estimate.

These figures represent annual records for domestic oil production, driven by higher oil prices and increased well productivity in the short term. While production growth in the US is expected to slow as well-level productivity stabilizes, rising oil prices are anticipated to support increased oil-directed rig activity in 2024. The EIA foresees US oil output picking up in the second half of 2024, approaching 13.4 million b/d by the year's end.

Other non-OPEC producers with robust production growth forecasts include Brazil, Canada, Guyana, and Norway. Collectively, non-OPEC producers are poised to increase production by 2.1 million b/d in 2023 and 1.2 million b/d in 2024. This growth is expected to counterbalance output declines from the OPEC+ alliance, leading to a projected increase of 1.4 million b/d in global oil production for 2023 and 1.7 million b/d for 2024.

Despite ongoing production cuts extending through 2024, OPEC crude oil production is likely to increase by an average of 0.6 million b/d in 2024. Higher production targets for the United Arab Emirates, along with increasing production from Iran and Venezuela, will contribute to this uptick.

The EIA has adjusted its global oil demand outlook for 2023, increasing it by 30,000 b/d to 101.19 million b/d while maintaining its 2024 estimate at 102.8 million b/d. The agency anticipates that growing demand, coupled with OPEC production cuts, will prompt a shift from global oil inventory builds to inventory draws in the latter half of 2023, providing support to global oil prices.

In alignment with these expectations of tightening balances in global oil markets, the EIA has raised its 2023 forecast for Brent crude by $3.28 to $82.62/b and its 2024 outlook by $2.97 to $86.48/b. Brent prices are expected to reach around $88/b by year-end and remain at that level through the first quarter of 2024 before easing in the second quarter due to supply growth, leading to some rebuilding of global oil inventories.

Additionally, the agency projects WTI crude to average $77.79/b in 2023, a $3.36 increase from the previous estimate. The 2024 expectation has also been raised by $2.97 to $81.48/b.

For consumers, retail gasoline prices are predicted to average $3.56/gal in 2023, reflecting a 16-cent increase from the previous estimate. Gasoline prices are expected to decline to an average of $3.45/gal in 2024, an 11-cent increase from the previous estimate. The EIA attributes this upward adjustment to a series of unplanned refinery outages during the summer, impacting gasoline production and net imports.

Moreover, retail diesel prices are anticipated to reach $4.17/gal in 2023, a 21-cent increase from prior estimates, and $3.94/gal in 2024, a 10-cent increase from July's estimate.