Vitol’s Muller says he doesn’t see China’s oil demand declining ‘at all’ despite pandemic

Oil demand in China, the world’s largest user, is unlikely to be affected by the pandemic this year, as much of the country is still dependent on energy, the head of Vitol Asia said on January 16. .

“It does not look like China is going to reduce its [oil] demand,” Mike Muller told an online conference hosted by Dubai-based Gulf Intelligence. “The fabric of society is still heavily skewed towards manufacturing and energy-consuming businesses,” he said.

Beijing recorded inflow growth of 10.91m bpd in December, marking the second continuous month-on-month rise from a 39-month low of 8.94m bpd in December. october.

“Yes, there have been high profile cases of people moving through China transmitting omicron from one place to another…but we are far from seeing major demand,” Muller said.

S&P Global Platts Analytics estimates that China’s crude imports in 2022 will increase by 554,000 bpd from 2021. The start-up of new refining capacity, including a 400,000 bpd plant at Zhejiang Petroleum & Chemical, will a 320,000 bpd facility at Shenghong Petrochemical and an 80,000 bpd plant at Sinopec Zhenhai will contribute to the increase.

According to Platts Analytics, PetroChina’s future Guangdong petrochemical plant and Sinopec Zhenhai’s expansion may require additional crude imports in the second half of 2022.

Geopolitical bounty
Platts priced Brent dated 0.89% higher on January 14 at $86.965/bbl.

The benchmark is up nearly 60% from a year ago amid a broad recovery in the global economy and an easing of lockdown restrictions in several parts of the world. Vitol’s Muller said the price spike is also underpinned by a “geopolitical disruption premium.”

The start of the new year saw a series of attacks and threats against ships transiting through key choke points on either side of the Arabian Peninsula.

Oil prices are also supported by the lack of an Iran nuclear deal, Muller said.

“So the price we’re seeing now includes some people taking the view that maybe you’ll see Iranian volumes return sooner, but the question is in what form,” Muller said.

“Will the United States just allow Iran to inject more exports into the market even more than is currently the case because [it’s] more than a million tonnes of fuel per month, ending up in the markets without any sanctions being imposed on top of the crude,” he said.
Source: Platts


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Felix J. Dixon