China may overtake America as the world’s largest economy in the...

A report by the Oxford Institute for Energy Studies said that Chinese demand for oil has almost tripled over the past two decades, rising from 4.7 million barrels per day in 2000 to about 14.1 million barrels per day in 2019, contributing about a third of the growth in total global oil demand annually, as expected. That China continues to lead the engine of global oil demand growth in the future, as the Chinese economy is expected to surpass its US counterpart as the largest global economy in the near future.

The Institute granted permission to “OAPEC” to translate the summary and recommendations of studies and research papers that are issued periodically on it into Arabic, including this report, which came under the title “Chinese demand for oil in the wake of the Covid-19 pandemic.”

The report added that despite the potential growth areas in the Chinese economy, in which the per capita consumption of oil does not exceed one-third of its counterpart in the group of member states of the Organization for Economic Cooperation and Development, the rate of growth in China’s oil consumption during the next two decades is expected to be much lower than Its counterpart for the past two decades.

While China’s consumption of oil has increased by 9.4 million barrels per day during the past two decades, it is not expected that the size of the increase in China’s consumption of oil during the next two decades will exceed 3 to 4 million barrels per day, and the reasons for this are due to the structural changes that the economy is going through. The Chinese, which is represented in promoting its transition to an economy supported by domestic consumption instead of an economy dependent on the export sector, as well as the efforts of China’s national policies aimed at reducing air pollution and reducing greenhouse gas emissions.

Given the importance of China as a major influence in global oil demand, reducing the scope of uncertainty in forecasts of future consumption estimated at about one million barrels by weighting expectations of an increase in Chinese demand between 3 million barrels per day or 4 million barrels per day is crucial to global markets, especially in Under the transformation in the global energy system, and the concerns associated with this shift about the potential peak of global oil demand, the simple adjustment in expectations for China, which consumed 14 million barrels per day of oil in 2019, should have important repercussions on global oil markets.

Future prospects

The Oxford paper provided an outlook on the future prospects of Chinese demand for oil in the wake of the Corona pandemic, by raising questions about China’s efforts to recover from the epidemic and the policies to support growth and their implications for the future of Chinese oil demand. Among the most important findings of the paper are the following:

– With the gradual exit of China from the economic shock caused by “Corona”, it seems that government financial support measures and monetary easing policies are bearing fruit in the recovery of GDP, which grew during the second quarter of 2020 at a rate of 3.2% after the sharp decline it witnessed during the first quarter of the year. Which was -6.8%.

And the growth of investment in fixed assets, which rose 8.3% in July 2020, which is faster than the average pace in 2019. The increase in industrial output by 4.8%, supported by the acceleration in manufacturing, especially in the automotive sector.

– In general, indicators of business resumption show that Chinese economic activity has already recovered rates of 80-90% of its pre-Corona activity during the second quarter. However, the return of the industrial sector to pre-pandemic levels requires an increase in consumer demand, a process that has proven to be Slow, as retail sales remain weak.

The recovery also slowed due to local epidemics in Beijing and its neighboring provinces during the month of June, which led to the closure of schools and the application of another round of travel restrictions.

The near-term outlook points to a rapid recovery in industrial activity and a slower rise in consumer demand, as concerns about income and employment affect consumer spending, especially among China’s strong migrant worker force of 400 million, nearly half of whom work in commerce.

The economic recovery was reflected in an exceptional growth of Chinese demand for oil, as imports of crude oil jumped to 13 million barrels per day in June 2020, compared to an average of about 10.9 million barrels per day during the first half of the year, and higher on an annual basis by more than 1 million barrels per day ( 10%) and exceeded the growth of the past years of 800 thousand barrels per day.

The increase in China’s crude imports is due to a number of reasons, the most important of which is the refiners’ purchase of more US crude before the scheduled review of the “first phase” deal, as imports from the United States reached record levels of 0.7-0.8 million barrels per day in July and August. .

– The most important reasons for the increase in Chinese imports of crude oil are due to the massive construction movement of Chinese oil stocks, which the government has undertaken, taking advantage of low prices, and the Chinese government is considering adopting a new policy that requires refineries to maintain stocks that cover 35 days of operation instead of the previous policy that requires Only 15 days of operation, which will be positively reflected in the increase in Chinese imports of crude oil during the coming period.

– The revival of Chinese domestic demand for oil products at rates that are lower than local supplies, and the main reasons for the increase in the pace of operations in the refineries were the low prices of crude oil in the global markets and the local pricing mechanism for petroleum products that guarantees refining margins by setting a minimum retail price of 40 A dollar per barrel of crude oil, and the surpluses of domestic supplies of petroleum products, especially diesel and gasoline, indicate an expected increase in exports from them in the future.

– The Chinese government has formulated a new strategy called “dual circulation”, which was referred to in the government work report in May 2020. This strategy seeks to make the economy less vulnerable to external shocks through self-reliance in key technology. The strategy also indicates accelerating urban electrification. The Chinese government’s end use of energy, and the government’s new infrastructure plan, which is at the core of recovery efforts in the short term and focuses on its development urgently in the long term, focuses on seven specific areas: 5G networks, data centers, artificial intelligence, industrial Internet of things, and energy transmission. Ultra-high voltage, high-speed rail trains, and electric vehicle charging infrastructure.

Therefore, although the prospects for growth in Chinese demand for oil in the medium term are still strong, China’s ambitions regarding electricity, which lead the government’s focus on infrastructure to support its growing electric fleet, both private and public, will inevitably be reflected in the growth of Chinese demand for gasoline. And diesel in the long run. Kuwaiti news

On: Tuesday – October 27, 2020

A report by the Oxford Institute for Energy Studies said that Chinese demand for oil has almost tripled over the past two decades, rising from 4.7 million barrels per day in 2000 to about 14.1 million barrels per day in 2019, contributing about a third of the growth in total global oil demand annually, as expected. That China continues to lead the engine of global oil demand growth in the future, as the Chinese economy is expected to surpass its US counterpart as the largest global economy in the near future.

The Institute granted permission to “OAPEC” to translate the summary and recommendations of studies and research papers that are issued periodically on it into Arabic, including this report, which came under the title “Chinese demand for oil in the wake of the Covid-19 pandemic.”

The report added that despite the potential growth areas in the Chinese economy, in which the per capita consumption of oil does not exceed one-third of its counterpart in the group of member states of the Organization for Economic Cooperation and Development, the rate of growth in China’s oil consumption during the next two decades is expected to be much lower than Its counterpart for the past two decades.

While China’s consumption of oil has increased by 9.4 million barrels per day during the past two decades, it is not expected that the size of the increase in China’s consumption of oil during the next two decades will exceed 3 to 4 million barrels per day, and the reasons for this are due to the structural changes that the economy is going through. The Chinese, which is represented in promoting its transition to an economy supported by domestic consumption instead of an economy dependent on the export sector, as well as the efforts of China’s national policies aimed at reducing air pollution and reducing greenhouse gas emissions.

Given the importance of China as a major influence in global oil demand, reducing the scope of uncertainty in forecasts of future consumption estimated at about one million barrels by weighting expectations of an increase in Chinese demand between 3 million barrels per day or 4 million barrels per day is crucial to global markets, especially in Under the transformation in the global energy system, and the concerns associated with this shift about the potential peak of global demand for oil, the simple adjustment in expectations for China, which consumed 14 million barrels per day of oil in 2019, should have important repercussions on global oil markets.

Future prospects

The Oxford paper provided an outlook on the future prospects of Chinese demand for oil in the wake of the Corona pandemic, by raising questions about China’s efforts to recover from the epidemic and the policies to support growth and their implications for the future of Chinese oil demand. Among the most important findings of the paper are the following:

– With the gradual exit of China from the economic shock caused by “Corona”, it seems that government financial support measures and monetary easing policies are bearing fruit in the recovery of GDP, which grew during the second quarter of 2020 at a rate of 3.2% after the sharp decline it witnessed during the first quarter of the year. Which was -6.8%.

And the growth of investment in fixed assets, which rose 8.3% in July 2020, which is faster than the average pace in 2019. The increase in industrial output by 4.8%, supported by the acceleration in manufacturing, especially in the automotive sector.

– In general, indicators of business resumption show that Chinese economic activity has already recovered rates of 80-90% of its pre-Corona activity during the second quarter. However, the return of the industrial sector to pre-pandemic levels requires an increase in consumer demand, a process that has proven to be Slow, as retail sales remain weak.

The recovery also slowed due to local epidemics in Beijing and its neighboring provinces during the month of June, which led to the closure of schools and the application of another round of travel restrictions.

The near-term outlook points to a rapid recovery in industrial activity and a slower rise in consumer demand, as concerns about income and employment affect consumer spending, especially among China’s strong migrant worker force of 400 million, nearly half of whom work in commerce.

The economic recovery was reflected in an exceptional growth of Chinese demand for oil, as imports of crude oil jumped to 13 million barrels per day in June 2020, compared to an average of about 10.9 million barrels per day during the first half of the year, and higher on an annual basis by more than 1 million barrels per day ( 10%) and exceeded the growth of the past years of 800 thousand barrels per day.

The increase in China’s crude imports is due to a number of reasons, the most important of which is the refiners’ purchase of more US crude before the scheduled review of the “first phase” deal, as imports from the United States reached record levels of 0.7-0.8 million barrels per day in July and August. .

– The most important reasons for the increase in Chinese imports of crude oil are due to the massive construction movement of Chinese oil stocks, which the government has undertaken, taking advantage of low prices, and the Chinese government is considering adopting a new policy that requires refineries to maintain stocks that cover 35 days of operation instead of the previous policy that requires Only 15 days of operation, which will be positively reflected in the increase in Chinese imports of crude oil during the coming period.

– The revival of the Chinese domestic demand for oil products at rates that are lower than the local supplies. A dollar per barrel of crude oil. The surpluses of domestic supplies of petroleum products, especially diesel and gasoline, indicate an expected increase in exports from them in the future.

– The Chinese government has formulated a new strategy called “dual circulation”, which was referred to in the government work report in May 2020. This strategy seeks to make the economy less vulnerable to external shocks through self-reliance in key technology. The strategy also indicates accelerating urban electrification. The Chinese government’s end use of energy, and the government’s new infrastructure plan, which lies at the core of recovery efforts in the short term and focuses on its development urgently in the long term, focuses on seven specific areas: 5G networks, data centers, artificial intelligence, industrial Internet of things, and energy transmission. Ultra-high voltage, high-speed rail trains, and electric vehicle charging infrastructure.

Therefore, although the prospects for growth in Chinese demand for oil in the medium term are still strong, China’s ambitions regarding electricity, which lead the government’s focus on infrastructure to support its growing electric fleet, both private and public, will inevitably be reflected in the growth of Chinese demand for gasoline. And diesel in the long run. Kuwaiti news