IEA: China’s demand recovery may prompt oil producers to ‎reconsider production

The Executive Director of the International Energy Agency, Fatih Birol, said on Sunday that oil producers may have to reconsider their production policies after the recovery of demand in China, the second largest oil consumer in the world.

According to “Reuters”, China is the largest importer of crude in the world and the second buyer of liquefied natural gas, and investors are betting on the speed of its recovery after Beijing lifted anti-Covid-19 restrictions in December.

“We expect that about half of the growth in global oil demand this year will come from China,” Birol said on the sidelines of the Energy Week conference in India.

He added that the demand for aviation fuel in China is increasing sharply, which puts upward pressure on demand

“If demand rises strongly and if the Chinese economy recovers, there will be a need, in my opinion, for OPEC + countries to reconsider their policies” related to production, Birol said.

OPEC + angered the United States and other Western countries in October when it decided to cut production by two million barrels per day from November until the end of 2023, instead of pumping more to reduce fuel prices and help the global economy, as requested by the United States.

Birol expressed his hope that such a situation would not be repeated and that OPEC +, which includes members of the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, would return to playing a constructive role in the market with improved demand.

OPEC+ maintained its current production policy at a meeting on Wednesday, leaving the cuts agreed last year in place.

Birol said imposing a cap on Russian oil prices would likely cut Moscow’s revenues from oil and gas exports by 30 percent in January, or about $8 billion, compared to the previous year.

The G7 countries, the European Commission and Australia agreed a few days ago to a maximum of $100 per barrel of diesel and $45 per barrel of discounted products such as fuel oil, starting today.

This came in the wake of a similar measure implemented on the fifth of December, which prevents marine insurance provided by the West, financing and brokerage for Russian crude transported by sea unless it is sold for less than $ 60.

Birol added that fuel markets may face difficulties in the short term as global trade routes are “adjusted” to accommodate Europe’s growing dependence on imports from China, India, the Middle East and the United States.

He said that this may force other markets, such as Latin America, to search for alternative imports

Europe also decided to ban imports of refined fuel from Russia, starting from Sunday

However, Birol said the balance of the fuel market could improve from the second half as more refining capacity is added globally.