Growth in global oil demand will slow next year, but will still be at a high of 1.7% as China recovers from the COVID-related recession, the International Energy Agency (IEA) reported.

The IEA believes that China is still on track to reduce oil demand by 400,000 bpd this year to 15.4 million bpd, before recovering by nearly one million bpd in 2023.

Russia's oil production is projected to fall by 1.4 million bpd next year, leading to a further tightening of balances after a price cap imposed by the G7, the European Union and Australia on Dec. 5 took effect, the IEA said.

Russian production rose 90,000 bpd in November to 11.2 million bpd, just 200,000 bpd below prewar Ukraine levels. It has consistently exceeded IEA forecasts, although lower global prices and higher discounts on Russian oil mean that Moscow's revenues have fallen by $700 million to $15.8 billion.

While lower oil prices are a welcome relief for consumers facing rising inflation, the full impact of the embargo on Russian oil and petroleum products has yet to be seen, the IEA said.

Global economic concerns and demand worries in China, the biggest oil importer, have helped derail much of the rise in oil prices this year, but the IEA said demand has been surprisingly strong in some areas.

The IEA said that China, India and the Middle East have partially made up some of the shortfall left by lower oil consumption in Europe and other East Asian countries.

The data prompted the IEA to raise its estimate of oil demand growth this year by 140,000 bpd to 2.3 million bpd and for next year by 100,000 bpd to 1.7 million bpd, for a total of 101.6 million bpd.