Crude prices have soared following the extension of output cuts by top OPEC+ producers Saudi Arabia and Russia
Global oil demand will remain resilient despite a recent voluntary production cut by Saudi Arabia and economic headwinds facing major crude consumer China, according to Saudi Aramco’s chief executive, Amin Nasser.
Speaking to reporters on a media call on Monday, Nasser predicted that Chinese oil demand will continue to grow.
“There is still a lot of mileage for China and the economy (to pick) up,” the executive was quoted as saying by Reuters. Nasser added that the aviation sector was at 85% compared to pre-pandemic levels, indicating room for growth.
The comments come as China, the world’s second-largest economy, missed growth forecasts in the second quarter of the year, growing at an annual pace of 6.3% in April-June versus a projected figure of over 7%. Top investment banks, including Goldman Sachs and JPMorgan, earlier announced cuts to their full-year GDP estimates for China.
Saudi Arabia last week decided to extend a voluntary oil output cut of 1 million barrels per day for another month to include September, and said it could be extended beyond that or even deepened.
“We still have adequate supply to satisfy our customers,” Nasser assured the media meeting on Monday.
Oil prices have soared to four-month highs after Saudi Arabia and allied OPEC producer Russia pledged to keep supplies down for another month to tighten global markets further. In addition, Russia has announced plans to reduce exports by 300,000 bpd, starting from September. The world’s second-largest oil exporter had previously pledged to curb production by some 500,000 bpd, or nearly 5% of its output, from March until the end of this year.
OPEC+, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, agreed in October to slash output by about 2% of world demand from last November until the end of 2023. The group later agreed to further curbs in an effort to balance out the market.
Crude benchmark Brent was trading at around $85 a barrel on Tuesday, while WTI was at around $81.
