Page 14 - AsianOil Week 17 2022

AsianOil EAST ASIA AsianOil

Oil demand in

China plummets

PERFORMANCE DEMAND for oil in China is forecast to drop at
rates not seen since the first waves of the coro-
navirus (COVID-19) pandemic swept over the
country two years ago.
With various analysts predicting a decline of
up to 1.2mn barrels per day (bpd), figures posted
at the end of this month could show demand
down by up to 20% on April 2021.
Petroleum products across the board, includ-
ing diesel, jet fuel and gasoline have been hit as
China continues to lock down millions of its
citizens, thus drastically reducing consumption.
A reported 26mn or more residents of Chi-
na’s financial centre, Shanghai, have been in
full or partial lockdown for weeks. As a result,
city streets are deserted, with sales of gasoline at
the pump and business sectors linked to public
transportation effectively mothballed until Bei-
jing allows the public to return to work.
Scenes from China transmitted on TV in
neighbouring countries Taiwan and Japan fre-
quently show residents locked into apartment
buildings.
Mass testing of entire neighbourhoods to
help to counter the spread of the virus is com-
monplace. All the while, few are allowed out, and
life as normal has all but stopped.
Diesel sales in China have been hit just as
hard by a marked reduction in the trucking
industry as restaurants and stores in Shanghai
and across nearby regions remain shuttered.
And according to local Chinese news chan-
nels, things are forecast to get worse before they projected in March, on the back of the recent
get better. Reports over the past weekend on Chinese lockdowns in addition to the ongoing
domestic television are indicating lockdowns war in Ukraine.
As China is not a full member of the IEA, Bei-
A reported 26mn will be extended in a bid to help the country jing was not directly involved in a meeting of the
return to its desired ‘no-COVID’ status.
or more residents The most obvious and immediate indicator of agency in early April that saw agreements signed
of China’s this outbreak has been the drop in gasoline deliv- by 31 member countries to co-ordinate releases
from global oil stocks.
eries to service stations in the east of the country.
Sources indicate that the figures for April,
As an “association country”, however, China
financial centre, when posted, could be 40% down compared to does stand to benefit from the stability the release
Shanghai, have deliveries made in March – a slide in demand not is expected to bring to global energy markets.
seen since early 2020.
Perhaps predictably, some in East Asia
been in full or As a result, refineries all over China are mak- expect the IEA’s forecasts to drop even further in
partial lockdown ing moves to limit run rates. While still uncon- the coming weeks and months should Russian
firmed by Chinese authorities, if proved true, hostilities in Ukraine continue into the summer
for weeks. this could result in run rates dropping by 900,000 months.
bpd analysts say.
This would only be exacerbated further
Such is the severity of China’s COVID-19 should millions in China be prevented from
lockdowns that the International Energy Agency travelling during upcoming holiday weekends
(IEA) recently revised its annual oil demand pro- and school holidays in July and August.
jections, in large part owing to the situation in OPEC too has moved to revise its forecasts
the country. for oil demand for 2022 down, by 500,000 bpd.
The Paris-based agency amended its global Echoing the IEA, OPEC cited the war
oil demand forecast for 2022 earlier this month in Ukraine and reduced demand caused by
to an average of 99.4mn bpd. This would mark a COVID-19 concerns in China as the primary
decrease of 260,000 bpd from the 99.66mn bpd reasons for its downward revision.™

P14 www. NEWSBASE .com Week 17 29•April•2022