Four new trends driving the oil industry in 2023

1. Supply is tight 

While traders are quite concerned about the state of the global economy, most investment banks and energy consultancies are still forecasting higher oil prices through 2023, and for good reason, at a time when crude supplies are tightening around the world. Opec + ‘s recent decision to cut production by an additional 1.16 million barrels per day (BPD) due to the collapse in oil prices caused by factors outside the industry is one example, but not the only one, of how supplies are tightening. 

2. Higher investment due to inflation

Global oil demand is expected to be higher this year than it was last year, despite both real supply and artificial controls tightening. The International Energy Agency (IEA) expects global oil demand to reach record levels this year and outstrip supply by the end of the year. The oil and gas industry is preparing to respond, with governments and environmental activist groups stepping up efforts to reduce oil and gas production regardless of the demand outlook, so the oil majors and smaller industry players are firmly on the path of cost reduction and efficiency improvement.

3. Focus on low-carbon 

It is because of this growing pressure that the oil and gas industry is diversifying into low-carbon energy sources, including carbon capture. This is especially true of U.S. oil majors: Chevron recently announced growth plans in the sector, and ExxonMobil has gone even further, saying its low-carbon business will one day surpass oil and gas as a revenue contributor.

4. Opec’s growing influence

A few years ago, analysts argued that Opec was rapidly losing its usefulness due to the emergence of U.S. shale. Then came Opec +, with Saudi Arabia joining forces with the big producers, the larger crude exporting group that accounts for an even larger share of global oil supply than Opec alone used to, and is willing to manipulate the market for its own benefit. 

Notably, there is no government pressure, as all Opec + members are well aware of the benefits of oil revenues and will not give them up in the name of higher targets for the Energy transition.