Page 32 - HRC_Annual_Report_2023

30 About HRC Value Creation Management Discussion Leadership
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MARKET CHALLENGES

2023 GLOBAL MARKET LANDSCAPE
Crude oil markets continued to experience volatility in 2023 due to geopolitical hostilities, global economics, and US interest
rates hike. Numerous risks underlie the current relative calm. Continued conflict in the Eastern Europe prolonged for over a year,
is now accompanied by the risk of protracted conflict in the Middle East. Underpinned by these factors, freight cost and crude oil
premium remain elevated despite falling hydrocarbon cracks.
Periods of extreme weather are becoming a major hazard for energy security. The rapid emergence of renewable energy and
new technologies are also emerging as market disrupters. The year ended with global solidarity on the COP28 agreement to transition
away from fossil fuels which could cause significant impact on demand and supply, and trade and investment within the industry.

Despite these challenges, led by China’s THE YEAR’S CRUDE OIL PRICE PERFORMANCE
recovery in oil demand which accounted for Brent Crude - Historical Annual Data
80% of this year’s increase, global oil demand
Average
grew by 2.3 mbpd in 2023 and crossed Year Closing Price Year Open Year High Year Low Year Close
the 100 mbpd mark for the first time in
history. As a whole, global oil demand in 2023 $82.49 $80.36 $97.10 $71.03 $77.39
2023 was around 101.7 mbpd from 2022 $100.93 $78.25 $133.18 $76.02 $82.82
100 mbpd in 2022, and Brent’s 2023 2021 $70.86 $50.37 $85.76 $50.37 $77.24
annual price averaged 18% YoY lower at
USD82.49 per barrel (2022: USD100.93/b). 2020 $41.96 $67.05 $70.25 $9.12 $51.22

BRENT CRUDE OIL PRICES
STEO
forecast
120

Brent Crude Oil Prices (USD/Barrel) 80
100

60

40

20

0
2015 2017 2019 2021 2023

2023 DOMESTIC MARKET LANDSCAPE
Within this backdrop, Malaysia’s economy stayed resilient and delivered a gross
domestic product (GDP) of 4%, supported by improved household income,
the recovery of the global electronic cycle and resumption of global tourism.
Analysts continue to forecast that Malaysia’s oil and gas sector will stay buoyant
* The 28 Conference of the Parties of the United
th
Nations Framework Convention on Climate in 2024, underpinned by resilient investment and oil prices. Malaysia’s 2024
Change (COP28) held in Dubai and concluded on Budget is based on a Brent oil price assumption of USD85 per barrel,
13 December 2023. supported by continued production cuts from the Organisation of the Petroleum
Sources: Exporting Countries (OPEC) at least until mid-2024, geopolitical uncertainties,
- World Energy Outlook 2024 (WEO) anticipated diminishing supply growth from the United States in 2024,
- International Energy Agency Oil Market report and restocking drive of the U.S. strategic petroleum reserve.
- Malaysian Institute of Economic Research