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- OPEC+ may need to lift oil output as Chinese demand is shaping up for a strong comeback, the IEA’s chief said.
- The Paris-based IEA expects half of this year’s global oil demand growth to come from China, he said.
- There are already signs Chinese oil demand is recovering as Beijing eases COVID-19 curbs, Birol said.
The OPEC+ alliance of leading oil producers may need to lift its oil output given China’s reopening is shaping up to deliver a strong boost in demand, according to the head of the International Energy Agency.
Oil demand growth has largely depended on China, given it’s the world’s largest crude importer. But its demand has become the biggest uncertainty in global oil markets, even as Beijing eases its COVID-19 lockdown policies and reopens its economy.
“If demand goes up very strongly, if the Chinese economy rebounds, then there will be a need, in my view, for the OPEC+ countries to look at their (output) policies,” Fatih Birol, the IEA’s executive director, told Reuters on Sunday.
According to Birol, there are already signs that Chinese demand for oil is recovering as the country’s jet fuel demand has ballooned.
“We expect about half of the growth in global oil demand this year will come from China,” Birol said.
OPEC+ — or the Organization of the Petroleum Exporting Countries and its allies, including Russia – have been slashing oil output by 2 million barrels per day as part of an oil production target set in October. In December, the group said its oil policy will remain unchanged till the end of 2023.
The output cut drew criticism from the US, which saw it as a move to boost crude prices. US benchmark WTI crude futures have slumped from their March 2022 highs above $120 a barrel, thanks to worries a potential global recession would weigh on demand. Meanwhile, Brent crude futures, the international benchmark, have fallen for three months straight.
WTI crude futures were up almost 1% at $74.10 a barrel at last check Monday, while Brent crude futures rose 1.2% to $80.88 a barrel after Birol’s comments on Chinese demand.