Which factors to have downside impact on Middle East oil demand?
Baku, Azerbaijan, Nov.19
By Leman Zeynalova – Trend:
In Saudi Arabia, September oil demand growth remained in negative territory for the sixth consecutive month, with numbers now indicating a sharp 14 percent year-on year (y-o-y) drop, according to OPEC.
The main factors behind the bearish oil demand requirements during September were shrinking crude direct use, as a result of efficiency advancements and fuel substitution, as well as continuing economic shift that impacts several oil demand-related sectors, particularly transportation, said the cartel’s Oil Market Report.
Oil demand in the first nine months of 2018 has risen in Iraq, despite declining crude direct use, which has been partly substituted by natural gas and residual fuel oil, the cartel said.
OPEC estimates that during September, oil demand rose by almost 0.2 million barrels per day (mb/d) y-o-y.
“Overall gains were observed in rising requirements for all main petroleum product categories, with the exception of jet/kerosene and crude direct use, where demand growth moved into negative territory. Demand was particularly strong for residual fuel oil, diesel, gasoline and LPG,” said the report.
This is while during the first eight months of 2018, oil demand growth was negative in Iran, with a mixed picture among petroleum product categories.
“Gasoline accounted for the bulk of additional volumes, but this was more than offset by shrinking residual fuel oil and jet/kerosene requirements. “
OPEC expects that for the remainder of 2018 and into 2019, oil demand growth in the Middle East will likely be subject to a number of challenges, which, in general, point more towards the downside.
“This includes substitution with natural gas, partial subsidy removals in several countries, as well as government programs towards efficiencies, particularly related to oil use in the road transportation sector. On the other hand, economic and industrial activity developments in various countries of the region may lend some upward support for future oil demand. For 2018, Middle East oil demand is forecast to decline by 60,000 b/d y-o-y, while oil demand in 2019 is projected to increase by 60,000 b/d y-o-y.”
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