BAKU, Azerbaijan, August 15. Europe's oil demand is expected to decrease by 70 kb/d year-on-year to reach 13.4 mb/d in the second half of 2023, Trend reports.
According to the data obtained from the International Energy Agency (IEA), in the second quarter of 2023, oil demand in OECD Europe experienced a slight increase of 30,000 b/d year-on-year. Strong growth of 130,000 b/d y-o-y in jet/kerosene led to a recovery in deliveries to 90 percent of pre-pandemic levels.
However, as the agency noted, this progress was largely counteracted by the continued decline in gasoil demand, which dropped by 100,000 b/d y-o-y. Among petrochemical feedstocks, the usage of LPG/ethane rose by 160,000 b/d y-o-y, benefiting from its cost advantage over naphtha. Naphtha deliveries plummeted by 140,000 b/d, reaching a multi-decade monthly low of 790,000 b/d in May.
Thus, as projected, gasoil (down by 190,000 b/d y-o-y) is the primary contributor to the decline in demand, as the region's industrial outlook remains persistently bleak. Manufacturers are grappling with increased wage costs, limited access to credit, and sluggish demand for their products. The worsening credit crunch also bodes poorly for businesses in the region, with the ECB reporting record-low demand for business loans in the eurozone during the second quarter of 2023.