Aramco sees oil demand riding China, aviation

Requirement for oil will continue to grow for the rest of decade

The world’s biggest oil company is confident demand will grow strongly this year as China reopens its economy and the aviation market recovers.

“We are very optimistic in terms of demand coming back to the market,” Saudi Aramco’s CEO, Amin Nasser, said in an interview. “We are starting to see good signs coming out of China. Hopefully, in the next couple of months we’ll see more of a pickup in the economy there.”

Demand for jet fuel is now around 1 million barrels a day below pre-pandemic levels, according to Nasser, roughly half the figure from a year ago. “It’s picking up,” he said at the World Economic Forum in Davos.

Oil prices whipsawed in 2022. Brent crude surged to almost $130 a barrel in the wake of Russia’s attack on Ukraine, but slumped in recent months as the Chinese, US and European economies slowed. It’s trading at about $86.30 a barrel, up 0.5 per cent since the end of December.

Many Wall Street banks, including Goldman Sachs Group Inc., expect it to climb above $100 a barrel in the second half of the year. They cite a global economic rebound by that time, low fuel stockpiles in nations such as the US and the potential for Russian exports to drop as the west tightens sanctions.

Dwindling buffers

Nasser reiterated that companies need to invest more in oil production. Idle capacity stands at 2 million barrels a day, barely above total demand of 100 million barrels, and will probably drop as China ends its coronavirus lockdowns, he said.

Aramco sees oil demand continuing to grow for the rest of the decade, even as electric vehicles become more popular and investors pour money into renewable energy.