Global oil demand is expected to reach pre-epidemic levels early next year as the economy recovers, although additional refining capacity may depend on the outlook, producers and traders said at an industry conference on Monday.
The outlook is consistent with a brighter forecast from the Organization of the Petroleum Exporting Countries (OPEC), but ahead of the International Atomic Energy Agency’s (IEA) estimates.
Greg Hill, president of Hess Corporation, said global demand was expected to grow by 100 million barrels (bpd) per day by the end of 2021, or the first quarter of 2022.
According to the IEA, the world used 99.7 million bpd of oil in 2019 before the Kovid-1 pandemic epidemic disrupted economic activity and fuel demand.
At the Platts APEC 2021 conference, industry leaders noted that the demand for some refined products, such as jet fuel, petrol and diesel, has hurt recovery.
The recovery in demand is expected to boost refiners’ profits and create space for return or new production, but experts warn that the extra refining capacity will be a drag.
In China, new mega refiner Shenghong Petrochemical is set to begin trial operations soon, while Zhejiang Petrochemical has completed two new crude units this year.
Arif Mahmood, Petronas’ executive vice president and downstream chief executive, said Malaysia’s Petronas also hopes to resume work with Saudi Aramco at its 300,000-barrel-daily refinery-petrochemical complex.
Recovering global demand
Brent crude futures have jumped more than 50 percent this year since October 2018, which has helped OPEC and its partners recover from the energy demand and tight supply of a group called OPEC +, including Russia.
Goldman Sachs expects oil prices to reach $ 80 a barrel by the end of the year. Prices are now below $ 80.
OPEC sees global oil demand averaging 100.8 million bpd in 2022, exceeding pre-epidemic levels, while the IEA expects it to average 96.1 million bpd in 2021 and 99.4 million bpd in 2022, up from 90.9 million bpd in 2020.
Indian refiner Naira Energy expects the 400,000 bpd refinery to run close to 100% capacity in 2021 as fuel demand rises, says CEO Aloys Virag
He said India’s fuel demand is likely to increase by 11 per cent after the second wave of Kovid-1 infections eases as its economy is “driven towards higher growth”.
“When it comes to refining, petroleum products, we’re careful,” said Arif of Petronas.
“We hope to see a recovery later this year, early next year,” Arif said.
However, in the long run, a global push towards electrification of road transport to reduce carbon emissions could halve the world’s oil refining capacity by 2050, says consultant Restad Energy.
Kaustav Samanta, Roslan Khasaoneh and Florence Tan
This News Originally From – The Epoch Times