Small Spare Capacity, Russian Supply, Rising Chinese Demand To Keep Oil Market On Edge

Energy markets are balanced now, but could easily be disrupted due to tight spare production capacity, supply uncertainties from Russia and rising oil demand from China, Executives and officials from some of the world's top oil and gas companies said during CERAWeek.

• "There is very small spare capacity available so small changes in supply have impact. It is easy for the market to move in either direction," said Anders Opedal, CEO of Equinor said.
• Tighter global crude supplies are also possible after the Kremlin's threat last month to cut 500kbpd of supply from March, Opedal added.
• "We may have gotten through this winter surprisingly well, but I don't think we're out of the woods yet," Michael LaMotte, senior managing director at Guggenheim Partners said.
• Tight spare capacity makes it critical for governments sanctioning Moscow for the invasion of Ukraine to put a price cap on Russian oil instead of capping the country's ability to export crude, said Frederic Lasserre, Gunvor's global head of research and analysis.
• Though Russian oil is still getting to market, it is at different costs, as ships must travel longer distances to get the crude to countries that have not imposed sanctions, said Chevron CEO Mike Wirth.
• The oil market outlook later this year becomes murkier as companies, consumers and governments wrestle with factors ranging from fears of a potential global recession and higher interest rates to growing energy demand from China as it exits coronavirus restrictions, OPEC Secretary General Haitham Al Ghais.
• China's oil demand will grow 500-600kbpd in 2023, while global oil demand growth is expected to grow 2.3 million barrels per day in 2023, Al Ghais said.
• "This year is going to be a harder environment... driven by wider macro economics, also combined with what is going on with flows from Russia," said Savvas Manousos, CEPSA's executive vice president of global trading.