Macro oils short-term outlook: July 2023 Report

Commodity Market Report 06 July 2023

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Report summary

Brent prices traded in the mid $70/bbl range in June as continued weak economic signals were balanced against OPEC+ supply cuts. In July, OPEC+ announced further voluntary production reductions to support the market: Saudi Arabia extending their 1 million b/d cut from July into August; and Russia to cut supply by 0.5 million b/d in August. The agreement is symbolic, with Russia and Saudi Arabia once again at the same target production level for August and reaffirms their intent to maintain a balanced market. The market fundamentals still support price recovery through H2 2023. Highlights of this monthly update include: • Saudi Arabia, Russia and Algeria announce additional OPEC+ production cuts for August • Declining rig count results in downgrade to US Lower 48 supply outlook for 2024 • Extension of supply, demand and price analysis through 2025

Prices to soften in 2025 as we extend our short-term outlook
Global Supply: Saudi Arabia extends its million b/d cut through August and is joined by Russia, with a 500,000 b/d cut
- Non-OPEC supply: downgrades to Canada, the US and Azerbaijan
- US Lower 48: production on track to add more than 700,000 bpd in 2023
- Outlook extended to 2025 – growth from US is supported by Brazil, Canada and Guyana.
- OPEC supply: crude oil output lowered as Saudi Arabia extends 1 million b/d cut into August
Global demand: The post pandemic recovery faces headwinds from a weakening global economy
- Liquids demand by key markets
- Global outlook for 2024
- Global outlook for 2025
Risks to the outlook