Saudi Aramco’s CEO Opens Up: Oil Demand Too Weak To Ease OPEC+ Output Cuts

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By Tsvetana Paraskova

Global demand currently is not supportive for OPEC+ easing the oil production cuts on January 2021, Ibrahim Al-Buainain, president and chief executive of Aramco Trading, told Gulf Intelligence on Wednesday.

OPEC and its Russia-led partners will likely consider “a lot of demand issues” before tapering their cuts, he said in an interview with Gulf Intelligence. OPEC+’s decision will depend on how economies recover, including the U.S. economy from a potential stimulus, Al-Buainain added.

The OPEC+ group is set to relax the current collective cut of 7.7 million barrels per day (bpd) to 5.8 million bpd beginning in January next year. However, the second COVID-19 wave in Europe and the United States is threatening economic and demand recovery and has increased market talk and speculation that OPEC+ may not and/or should not increase oil supply at the start of next year.

Currently, the only bright spot in demand is China, which is expected to sustain solid demand in the fourth quarter and into the start of 2021, Aramco Trading’s Al-Buainain told Gulf Intelligence.

While demand in China is holding up and is back to nearly normal levels, demand in the developed economies in Europe and in the United States doesn’t look so bright at all, due to the spike in new coronavirus cases. The second wave is a threat to demand and is delaying the recovery from the slump in the second quarter, oil industry executives and OPEC itself have warned recently.

The second wave of coronavirus cases in the world is impacting global oil demand “maybe a little bit more than we thought” in the second half of this year, BP’s chief executive Bernard Looney said earlier this week.

Oil prices plunged by 4 percent at 8 a.m. EDT on Wednesday after the American Petroleum Institute (API) reported on Tuesday a bigger build than expected in crude oil inventories, adding to concerns that demand is weakening at a time when more supply from Libya is coming to the market.

  • NB: This article by Tsvetana Paraskova was culled from  Oilprice.com
'Dotun Akintomide
'Dotun Akintomide
'Dotun Akintomide's journalism works intersect business, environment, politics and developmental issues. Among a number of local and international publications, his work has appeared in the New York Times. He's a winner of the National Youth Service Corps (NYSC) Award. Currently, the Online Editor at The New Diplomat, Akintomide has produced reports that uniquely spoke to Nigeria's experience on Climate Change issues. When Akintomide is not writing, volunteering or working on a media project, you can find him seeing beautiful sites like the sandy beaches that bedecked the Lagos coastline.

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