Despite recession fears, the head of the International Energy Agency said Tuesday that the global energy supply crunch likely will get worse before it gets better, and OPEC’s first oil market outlook for 2023 showed no relief from market tightness.
“The world has never witnessed such a major energy crisis in terms of its depth and its complexity… We might not have seen the worst of it yet,” IEA Executive Director Fatih Birol said.
“This winter in Europe will be very, very difficult,” Birol said, which “may have serious implications for the global economy.”
Meanwhile, OPEC’s oil market outlook expects global oil demand growth to exceed the increase in supplies by 1M bbl/day next year, a gap the cartel does not seem equipped to fill as members already are falling far behind the volumes needed due to underinvestment and political instability.
Output from the 10 OPEC members involved in plans to gradually raise production totaled 24.8M bbl/day in June, ~1M bbl/day behind the agreed-upon quota for June of 25.87M bbl/day.
Global and U.S. benchmark crude oil closed below $100/bbl on Tuesday, with front-month September Brent crude (CO1:COM) -7.1% to $99.40/bbl, its lowest level since April 11, and Nymex crude (CL1:COM) for August delivery finished -7.9% to $95.84/bbl.
ETFs: (NYSEARCA:USO), (UCO), (SCO), (USL), (DBO), (USOI), (NRGU)
The S&P 500 Energy Sector index has lost 23% since June 1, and energy shares may be losing their status as the place where investors can find refuge from this year’s stock market carnage.