* We raise our average Brent oil price assumption for 2023/24F by 11% to USD83/bbl. As of October 4, the YTD average Brent oil price was USD82/bbl — 9% higher than our previous 2023F forecast of USD75/bbl. We attribute the strong performance of Brent oil price since late July 2023 mainly to three factors: tighter global oil supply due to OPEC+ cuts, declining US production, and resilient consumption from major economies. On October 4, Saudi Arabia confirmed that it will continue its voluntary oil production cut of 1 million barrels per day (bpd) until the end of the year, while Russia stated it will maintain its 300,000-bpd cut. These commitments uphold the existing cut of 4.96 million bpd from OPEC+, representing approximately 5% of global demand until the end of 2023.

* The International Energy Agency (IEA), the US Energy Information Administration (EIA), and OPEC increased their 2023 global crude oil demand forecasts to 101.6 million bpd, surpassing pre-COVID levels and forecasting demand to grow further by 1.4 million bpd in 2024. Additionally, projected 2024 US oil production growth of 3% is half of the previous year’s growth. EIA forecasts a global oil surplus of 2.2 million bpd on the assumption that OPEC’s cuts of 4.96 million bpd and 1.7 million bpd will expire at end-2023 and end-2024, respectively. We believe that OPEC+ will extend its current voluntary cuts, which will effectively eliminate the surplus projected by the EIA. Consequently, we raise our 2024 Brent oil price assumption to USD83/bbl (3% lower compared to market consensus).

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