Saudi Aramco looks to China and India to prop up oil markets

KUALA LUMPUR, Malaysia – Saudi Arabia’s state oil giant Aramco is bullish on the oil market for the remainder of 2023, as demand from top importers China and India is expected to remain strong despite an expected global economic downturn.

“In our view, the fundamentals of the oil market remain generally sound for the rest of the year,” Chief Executive Amin Nasser told the Asia Energy Conference in Kuala Lumpur, the Malaysian capital.

He remained optimistic despite signs of stagnant growth in China, the world’s largest oil importer, leading to multiple cuts in the country’s main lending rate.

“While some OECD countries are at risk of recession, the economies of developing countries, especially China and India, have driven oil demand growth by more than 2 million barrels per day this year,” Nasser said.

He expects the industry’s supply-demand balance could tighten once the global economy starts to recover.

“Despite some economic headwinds in China, the transport and petrochemical sectors are still showing signs of demand growth,” the CEO added.

This echoes the International Energy Agency’s forecast that global oil demand will rise by 2.4 million bpd in 2023, surpassing the previous year’s rise of 2.3 million bpd. China contributed 60% of the gains, the agency noted in its June report.

“Demand in India was also strong, with the latest figures for May showing record-breaking gasoline and diesel,” the agency said in a June report. Conversely, amid a persistent manufacturing slump and broadly weak economic growth, OECD Demand to organize the state “remains subdued”.

The Aramco chief executive also noted that issues of energy security and affordability have not been given enough attention.

Asia needs more and more energy, given its status as an economic powerhouse and population growth rate, but that path to prosperity is “increasingly threatened by current transformational policies,” he said.

“Even at the top of the transition ball, things are hardly rosy,” Nasser said.

Nasser said that while renewable energy and electric vehicles have contributed over the past decade, they have not been enough to meet the growth in global energy consumption.

He noted that the price of green hydrogen is still in the $400 a barrel range, while oil is around $75 a barrel.

“Demand for traditional energy sources such as oil and gas continues to increase, while coal remains the world’s largest source of electricity,” he said.

He noted that current transitional policies have led to a decade of underinvestment in oil and gas, a situation that would lead to “energy chaos”. OPEC’s secretary-general spoke earlier on the sidelines of the meeting.