Weaker demand will aid gradual oil market rebalancing

Significance

In a tight market, even small supply disruptions acquire heightened significance. Greater uncertainty, partly reflecting the ascendence of political over economic factors in the market, creates disparate pathways and opposing market outlooks.

Impacts

• Stagnating incomes and high oil prices will limit demand into 2023.
• EU sanctions will cause further disruption to Russian oil flows.
• Supply increases will remain modest, barring the small possibility of a Saudi surge.