Vienna, Austria — The Organisation of the Petroleum Exporting Countries (OPEC) forecast that the UAE’s economy will continue its robust performance in 2023, after recording a growth of 7.9 percent year-on-year in 2022.
According to OPEC’s Monthly Oil Market Report for August, this robust performance will be delivered through constant contributions from the non-oil sector, especially from tourism, leisure and real estate.
The report revealed that the country’s Global Purchasing Managers’ Index (PMI) was almost unchanged in July, standing at 56, following 56.9 in June and compared to a level of 55.5 in May. This suggests that the expansionary trend will be maintained.
The UAE’s real estate market remains on an upward trajectory, the report further showed, with H1’23 seeing a substantial surge in overall property transactions. This played a role in driving up residential property prices in Dubai by 16.9 percent YoY as of June, as reported by REIDIN.
Finally, the Central Bank of the UAE (CBUAE) mirrored the 25 bp increase in interest rates implemented by the US Federal Reserve in July, putting the key-policy rate at 5.4 percent and resulting in a total rise of 525 bp in just over a year. The short-term interest rate is now approaching its highest level since before the global financial crisis.
The report said the oil demand growth is forecast to slow to 2.2 mb/d in 2023, down from 2.4 mb/d in the previous assessment.
The OECD region is expected to expand by about 0.3 mb/d, with OECD Americas contributing the largest increase.
The non-OECD is set to drive growth, increasing by around 2.0 mb/d, with China, the Middle East and Other Asia contributing the largest share.
World Oil Supply
Non-OPEC liquids supply is expected to expand by 1.5 mb/d in 2023, a slight upward revision from the previous assessment.
The main drivers of liquids supply growth for 2023 are expected to be the US, Brazil, Norway, Kazakhstan Guyana and China, while the largest decline is expected from Russia.
For 2024, non-OPEC liquids production is projected to grow by 1.4 mb/d, unchanged from the previous assessment.
Product Markets and Refining Operations
Refinery margins in July continued to rise, with solid gains across all regions.
Global refinery intake in July continued to trend upwards, moving 793 tb/d higher m-o-m to average 81.9 mb/d, according to preliminary estimates.
Tanker Market
The tanker market drifted lower in July, with Aframax and Suezmax spot freight rates approaching the lowest levels seen so far this year amid slowing of activities in the Atlantic basin for these vessels.
Crude and Refined Products Trade
Preliminary data show US crude imports remained at strong levels in July, averaging 6.5 mb/d, while US crude exports fell below 4 mb/d amid reduced flows to Asia.
China crude imports jumped to the second-highest on record in June, averaging 12.7 mb/d, although preliminary customs data shows crude inflows dropped to 10.3 mb/d in July, as the previous month’s arrivals dampened crude needs for the month.
India’s crude imports declined for the fourth month in a row in June to average 4.7 mb/d, as the country moved towards the lower-demand monsoon season.
Japan’s crude imports declined for the second-consecutive month to reach a 12-month low of 2.3 mb/d in June.
Commercial Stock Movements
Preliminary data for June 2023 sees total OECD commercial oil stocks up m-o-m by 4.2 mb. At 2,828 mb, they were 74 mb lower than the latest five-year average and 119 mb below the 2015–2019 average.
Balance of Supply and Demand
Demand for OPEC crude in 2023 is revised down by 0.1 mb/d from the previous month’s assessment to stand at 29.3 mb/d.
Demand for OPEC crude in 2024 is also revised down by 0.1 mb/d from the previous month’s assessment to stand at 30.1 mb/d.