Middle East oil demand projected to drop in 2020
BAKU, Azerbaijan, May 14
By Leman Zeynalova – Trend:
Middle East oil demand recorded a 0.08 million barrels per day (mb/d) year-on-year increase in 2019, while it is projected to decrease by 0.60 mb/d in 2020, Trend reports citing OPEC’s Monthly Oil Market Report (MOMR).
Middle East oil demand in February is estimated to have declined by nearly 0.20 mb/d compared with the same period in 2019.
The majority of the decline resulted from a drop in oil requirements in IR Iran (-0.12 mb/d y-o-y), Iraq (-0.04 mb/d y-o-y), the UAE (-0.04 mb/d y-o-y) and Qatar (-0.02 mb/d y-o-y). On the other hand, oil consumption increased in Kuwait (0.01 mb/d y-o-y) and was flat in Saudi Arabia.
From a product prospective, jet/kerosene and gasoline weakened the most in February, shedding around 0.12 mb/d y-o-y each, as demand for transportation fuel dropped in IR Iran, the UAE and Qatar. Residual fuel oil demand decreased by 0.13 mb/d y-o-y, mostly in Iraq, with Saudi Arabia following. This is in line with seasonally lower demand for air conditioning in 1Q20 and ongoing substitution programs in both countries,
The latest monthly data for Saudi Arabia indicates oil demand declined by around 0.14 mb/d y-o-y in March. However, in cumulative terms, oil demand data for 1Q20 remained marginally in positive territory. In March, transportation fuels were the main cause of the total decline, particularly gasoline and jet fuel, which fell by 0.14 mb/d and 0.04 mb/d y-o-y, respectively.
Going forward, transportation fuels are projected to drop steeply y-o-y, in line with last month’s projections. However, both gasoline and jet fuel are projected to decline more than in the previous estimation. Oil demand for the Middle East in 2020 will depend on overall economic activity and government spending plans, with risks currently skewed to the downside.
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