After the closures related to the Corona pandemic swept the world in 2020; BP Plc CEO Bernard Looney said oil demand may never return to its pre-pandemic peak. Recently, however, Looney has changed his view, APA reports citing foreign media.
After announcing ambitious plans to cut emissions, BP, one of the world’s largest crude oil producers, is making more investments in oil production, while oil consumption is heading to a record level this year, according to the International Energy Agency. This coincides with slowing supply – which has been hit by the Russian invasion of Ukraine, slowing shale oil growth in the US and lackluster investment in production.
Recently, bets have been high on China, in causing a crisis in the demand for oil, as it is the second largest consumer of crude in the world, especially after dropping the “Covid” restrictions.
Against the backdrop of tight supply, the increase in demand made all market observers, including Goldman Sachs and the Vitol trading group, expect oil prices to return towards $100 a barrel later this year.
For his part, the CEO of Saudi Aramco – the largest oil company in the world – Amin Nasser, said in an interview with “Bloomberg” agency on the first of March: “The demand from China is very strong.”
The impending crisis shows that even as the world embraces cleaner energy sources, the thirst for oil is hard to quench. It also complicates central banks’ efforts to tame inflation.
In turn, Saad Rahim, chief economist at the Trafigura Group, said on the sidelines of the International Energy Week conference in London last week: “My view, in short, is that people may be underestimating demand and overestimating US production.”
And in the wake of China’s abrupt reversal of its “zero Covid” policy – which requires mass lockdowns, travel quarantines, and testing and tracing – the Chinese economy is reviving demand for oil again. The manufacturing sector also recorded its largest improvement in more than a decade last month, accompanied by activity in the services sector, which is on the rise with the stability of the housing market, according to “Bloomberg”, and viewed by “Al Arabiya.net”.
The reopening means that Chinese oil consumption will reach a record level this year. Expectations are that daily demand will reach an all-time high of 16 million bpd after contracts in 2022, according to the median estimate of 11 China-focused advisers polled by Bloomberg News earlier this year.
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