China’s oil demand predicted to soar
Global oil producers may have to reconsider their output policies if demand in China recovers, Reuters reports, citing the International Energy Agency (IEA).
The warning comes as the OPEC+ alliance of major oil-producing nations, led by Russia and Saudi Arabia, decided last week to maintain output at current levels.
“We expect about half of the growth in global oil demand this year will come from China,” the IEA’s executive director, Fatih Birol, told the media outlet on Sunday on the sidelines of the India Energy Week conference. He added that China’s jet fuel demand is exploding, putting upward pressure on demand.
“If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their [output] policies,” Birol noted.
In October, OPEC+ member states decided to cut output by 2 million barrels a day from November through 2023 – the biggest output reduction since 2020 – which was agreed to despite US pressure to pump more.
The energy alliance has opted against further output cuts amid Western sanctions on Russia, citing concerns that Moscow could slash oil production in response to the embargo and price cap on its seaborne oil exports.
Uncertainty over Chinese demand also influenced OPEC’s decision, experts say, as the world’s largest crude importer and number two LNG buyer is still struggling with the consequences of the Covid-19 pandemic.
Last week, the OPEC+ Joint Ministerial Monitoring Committee, which tracks the alliance’s compliance with its output quota, reportedly recommended leaving the production cuts agreed to last year in place.
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