As optimism in China fades, are global oil markets headed for collapse? | Wilnesh News

SINGAPORE – As global oil traders and analysts gathered in Singapore last week for the annual Asia Pacific Oil Conference, the plunge in oil and its direction was at the forefront of everyone’s mind.

China, the main engine driving world oil demand, has been underperforming. exist International Energy Agency’s latest September reportIn the first half of 2024, global oil demand will increase by 800,000 barrels per day annually, with growth slowing to the slowest growth rate since 2020.

The main reason for the economic downturn is “the rapid slowdown of China’s economy” and shrinking consumption July is the fourth month in a rowyear after year. China is the world’s largest oil importer as well as second largest consumeraccounting for 15% of global oil consumption.

Tepid demand coupled with a supply glut sent U.S. crude prices to their lowest in more than a year earlier this month. Iraq and Kazakhstan, the main members of OPEC+, have produced more than their monthly quotas under the oil group’s agreement.

Members of the alliance recently postponed plans to increase production by 180,000 barrels per day in October as part of a plan to return 2.2 million barrels per day to the market in the coming months.

Given this situation, falling oil prices became a theme at Asia’s largest oil conference. The question is not whether oil prices will fall, but primarily how much they will fall in the next few years.

Daan Struyven, co-head of global commodities research at Goldman Sachs, estimates that crude oil prices could fall to as low as $60 a barrel within the next two years., If Chinese demand remains tepid. He did not rule out the possibility of a deeper decline.

“We estimate that Brent crude oil prices could fall to around $50 a barrel in the event of a mild U.S. recession… We are quite optimistic about the global economy,” Struvan said during the conference.

this The U.S. economy remains resilient even as high interest rates aimed at curbing sticky inflation have slowed growth and stoked recession fears. Still, a survey shows Americans believe the U.S. is already in recession.

China’s slowdown has prompted some to look for alternative oil demand drivers, with some looking to India as a potential candidate. India is the third largest oil consumer About 5 million barrels of oil are produced every day, accounting for 5% of world oil consumption.

According to IEA forecasts, India expected to lead oil demand growth in 2024surpassing China for the first time, with output expected to increase by 200,000 barrels per day.

India is the fastest growing large economy in the world and aims to surpass Japan and Germany as soon as 2027 to become the world’s third largest economy.

Chen Hongbing, general manager of Chinese refiner Rongsheng Petrochemical, said he expected India’s production to grow further and the South Asian country’s consumption of gasoline and diesel to increase.

Other experts are more cautious.

“Remember, India’s demand accounts for one-third of China’s demand,” said Vandana Hari, founder and CEO of Vanda Insights. “So, will global oil demand grow in our lifetime or beyond? Another China? I don’t think so,” she said.

Fereidun Fesharaki, chairman of energy consultancy Facts Global Energy, said that in the long run, India’s growth rate will remain stable until the mid-2040s, but its scale and magnitude will not be the same as China’s.