Aramco CEO Highlights China's Oil Demand as a "Bright Spot"

China's Oil Demand on the Rise

Amin Nasser, the CEO of Saudi Aramco, expressed optimism about China's oil demand during the Singapore International Energy Week conference. His bullish stance was fueled by Beijing's recent implementation of stimulus measures aimed at rejuvenating the world's second-largest economy.

Nasser highlighted an increased demand for jet fuel and naphtha, particularly for liquid-to-chemical projects. He attributed this growth to China's burgeoning chemical needs, driven by the transition to electric vehicles and solar panels. "A lot of it is happening in China mainly because of the growth in chemical needs. Especially for the transition, for the electric vehicles, for the solar panels, they need more chemicals. So that's huge growth there," he said.

Aramco's Plans for China

As the world's largest crude oil importer and second-largest oil consumer, China is Aramco's biggest crude oil client. Nasser revealed that Aramco intends to boost its liquids-to-chemical capacity to 4 million barrels per day, with the majority of the increase intended for the Chinese markets.

"China is a great market. We are investing with our partners," Nasser stated, noting that his company has ramped up investments in China. He also identified the demand for aviation fuel in the country as a "bright spot."

Slow Energy Transition in Asia

Nasser pointed out that the energy transition in Asia is progressing slower than initially expected. He predicted that over the next few decades, the Global South would increase oil demand as living standards improve, eventually leading to a long plateau.

"Most analysts agree that even when the growth in global oil demand stops at some point, no abrupt drop in overall demand is anticipated, and that stage is likely to be followed by a long plateau," he said. "Rather than an energy transition, we are really talking about energy addition."

Nasser suggested that more than 100 million barrels per day would still be needed by 2050, a stark contrast to predictions that oil demand will fall to just 25 million barrels per day by that time. He warned that a shortfall of 75 million barrels per day could be disastrous for energy security and affordability.

Call for Diverse Energy Sources

Nasser advocated for countries to utilize a mix of energy sources that would align with their climate goals, emphasizing the need to focus on currently available options.

A recent report from the International Energy Agency (IEA) suggested that crude oil demand could decline by the end of the decade due to the "Age of Electricity." However, contrary to predictions of a sudden drop in global crude oil demand, fossil fuels, particularly natural gas, are expected to continue powering the global economy for decades to come.

Bottom Line

The views expressed by Aramco's CEO highlight the complex dynamics of the global energy market. While some predict a swift decline in oil demand, others, like Nasser, foresee a slower transition and continued reliance on fossil fuels. What are your thoughts on this? Do you agree with Nasser's outlook? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is available every day at 6pm.