Saudi Aramco sees 'sound' oil outlook for H2CY23 on China, India demand

Saudi Aramco believes market fundamentals remain “sound”for the second half as demand from emerging markets led by China and India will offset recession risk in developed markets, CEO Amin Nasser told an industry gathering on Monday.

But other executives at the Energy Asia conference in Kuala Lumpur were divided, with Malaysia state oil firm Petronas reporting a slowdown in demand for petroleum and petrochemicals in the second quarter and growing refinery capacity putting pressure on the market.

“Overall, we believe that oil market fundamentals remain generally sound for the rest of the year," said Nasser, who heads the world's largest oil company.

“Despite the recession risks in several OECD countries, the economies of developing countries — especially China and India — are driving healthy oil demand growth of more than 2 million barrels per day this year,” he told the conference.

Although China faces economic headwinds, the transport and petrochemical sectors are still showing signs of demand growth, he added.

Brent crude futures are down about 14 per cent since the start of the year as rising interest rates hit investor appetite, while China's promising economic recovery has faltered after several months of softer-than-expected consumption, production and property market data.

Oil stored at sea globally highest since October 2020

The amount of oil being stored at sea globally climbed to the highest in more than two and a half years, aided by an unusual stash of Saudi Arabian barrels in the Red Sea. 

About 129 million barrels of crude were sat stationary on oil tankers in the week to June 23, according to data from Vortexa, an analytics firm. That’s the most since October 2020. Storage volumes in Asia hit an 11-month high last week, while those in the Middle East were the highest since January. 

A cluster of Saudi oil tankers has built up in the Red Sea, though there have been tentative signs in recent days that the number of vessels might be starting to dwindle.

(Bloomberg)