By Bloomberg|Joumanna Bercetche, Anthony Di Paola. | China is still driving growth in global oil demand, the head of Saudi Aramco said, dismissing concerns about peaking consumption in the world’s biggest energy user.
“We still see good demand coming out of China,” Aramco’s Chief Executive Officer Amin Nasser said in a Bloomberg television interview in Davos. The country, along with India, make up about 40% of the rise in global consumption and, “demand is increasing year on year.”
Aramco has long been positive about demand in China, its largest market and a target for major investments, even as the Asian nation was sluggish to recover from the coronavirus pandemic. Nasser’s said back in October that he was bullish on China after a series of government stimulus measures aimed at reviving the economy.
The optimism contrasts with signals of a slowdown, with even the country’s largest energy producer, China National Petroleum Corp., predicting oil demand may cease growing after 2025 as a shift toward electric vehicles gathers pace. Nasser said that while the EV push will erode gasoline demand, the country’s appetite for chemicals produced from oil will keep expanding.
“Even with the transition and going to electric vehicles, you need oil as a feedstock to produce the materials that would be required for any transition,” Nasser said. “The growth is still there.”
Aramco has invested in several refineries in China that can churn out more chemical products and less transport fuel. The company aims to take stakes 10%-20% in such projects while securing contracts to supply about 60% of the facility’s oil needs, thereby locking in long-term demand, Nasser said.
Oil Slowdown
Last year, Asia’s biggest economy increased oil use by just 180,000 barrels a day — less than a fifth of the rise seen in 2023 — as it grappled with an array of economic challenges, according to the International Energy Agency. Growth will pick up marginally to 220,000 barrels a day in 2025, the Paris-based IEA predicts, while remaining capped by signs of a deepening deflationary spiral.
The Chinese weakness was partly responsible for the 3% decline in oil prices last year, outweighing geopolitical risks in the Middle East. Crude in London has increased 6% this month following aggressive US sanctions on Russia.
Those restrictions are already starting to tighten the oil market, Nasser said. But it’s too early to see if the prospect of sanctions obstructing the flow of some 2 million barrels of daily Russian seaborne crude will have a lasting impact, he said.
Nasser expects global oil demand to rise by about 1.3 million barrels a day this year to 106 million a day. That’s slightly higher than the 1.05 million barrel-a-day growth forecast by the International Energy Agency.
STORY CREDIT: By Bloomberg, VIA RigZone.com|Joumanna Bercetche, Anthony Di Paola
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