Matthew Rigdon, Executive VP and COO

The uptrend in oil demand expected in the latter half of this year does seem to be coming to fruition. Even with the backdrop of a slowing global economy, the lifting of COVID restrictions in China was thought to drive oil demand significantly higher through this year. However, this has not been the case and China is taking measures to bolster its struggling economy. The Chinese central bank has cut interest rates for the first time in ten months and is looking for additional measures to get its economy back on track. OPEC+ (which includes OPEC, allies such as Russia, and accounts for roughly 40% of global crude production) is combating this drop in demand by agreeing to extend existing production cuts that were set to expire at the end of this year. Just last week, OPEC+ agreed to hold current cuts of 3.66 million barrels per day, which is equivalent to 3.6% of global oil demand. Additionally, in January of 2024, there will be a further cut in production from OPEC+ of 1.4 million barrels per day. This is action is to keep oil prices supported at the current levels until demand rises.
Though I am certainly not an economist nor an oil industry analyst, I suspect that the concerns of a global recession are likely overblown both in breadth and severity. I remain optimistic that the overall trends in global oil demand will continue to support robust activity in the US GOM which will in turn continue to support a strong OSV market.