Global Crude Oil Demand Growth Is Now Hostage to China, India

OILMONSTER.COM- Discussion in the crude oil market is degenerating into a single “will they or won’t they” focus on whether the Organization of the Petroleum Exporting Countries (OPEC) will ease their output restrictions next week.

While the meeting in Vienna on June 22 will undoubtedly heavily influence the direction of short-term crude prices, the market’s focus solely on supply could be viewed as somewhat myopic.

Demand is probably the more important driver of the oil price over the longer term, and the simple truth is that the global market is effectively now hostage to just two countries.

China and India have so far this year accounted for about 69 percent of the expected growth in crude oil demand, meaning that what happens in those two behemoths is likely of far more importance to the crude market than what may or may not happen in Vienna.

The International Energy Agency forecast last month that global crude oil demand would rise by 1.4 million barrels per day (bpd) in 2018, down from an earlier estimate of 1.5 million bpd.

For the first five months of the year China’s crude oil imports were 9.21 million bpd, according to customs data, a rise of 690,000 bpd on the same period in 2017.

India’s crude imports were 4.57 million bpd in the January-May period, up 272,000 bpd from the same period last year, according to vessel and port data and industry sources.

Together these two countries, the world’s biggest and third-largest crude importers, have brought in 962,000 bpd more in the first five months of 2018 than in same period last year.

If this pace of growth was maintained for the whole year, it would mean that China and India would account for the lion’s share of the IEA’s forecast for the increase in global demand. 

Courtesy: www.hellenicshippingnews.com