Saudi Aramco Confidence: Oil Demand Will Rise

Amin Hassan Nasser, president of oil giant Saudi Aramco, called the global oil demand growth forecasts “good” thanks to the recovery of China’s industry. The prospects are “good,” but just in case, Riyadh and Moscow decided to cut production in order to “guarantee a balance between supply and demand.”

Time does not stand still, and we are now in July, the month of the expected decline in oil production in Saudi Arabia. After the OPEC+ summit in Vienna in June last year, Saudi Arabia, without informing the other member countries of the Organization, announced a sharp unilateral reduction of its own oil production by 10%, which is one million barrels of crude oil per day. The purpose of the decision is clear: to prevent new falls in the prices of black gold on world markets. Meanwhile, the 10% unilateral production cut has also been extended to the month of August. “This shows how serious Riyadh is about influencing the markets,” said Russian expert Stanislav Mitrakhovich.

According to many international analysts, the main unknown is related to the new “geography” of Saudi exports. Everyone points the finger at the USA: Riyadh immediately assured China and some other Asian countries that their quotas would not be affected. At the same time, Saudi Arabia categorically rejected the possibility of accepting payments for exported oil in Chinese yuan. This was stated by President of Saudi Aramco Amin Hassan Nasser, according to whom “all contracts are denominated in dollars.”

In December 2022, Beijing began lobbying the use of the yuan instead of the dollar for oil trading. President Xi Jinping called on Arab countries to “help China reduce its dependence on the US in the oil sector.” In 2022, the request was immediately declined by Saudi Finance Minister Mohammed Al-Jadaan, and now Amin Nasser has said no to the use renminbi (yuan).

Economic growth in China lags behind. Nevertheless, Nasser called the prospects for growth in global oil demand “good.” Nasser spoke to reporters on the sidelines of the eighth OPEC seminar on July 5. “We believe in the growth of energy consumption in China and some other Asian countries,” said Nasser, according to whom Saudi Arabia is looking to diversify its supply destinations, as Russia has significantly increased its sales to China, Southeast Asia, and India. “We have increased exports to Europe. We recently signed a contract with the Polish importer Pkn,” Nasser specified. In June, some Indian importers began paying for Russian Urals oil in yuan.

Even the Minister of Energy and Infrastructure of the United Arab Emirates, Suhail bin Mohammed Al Mazroui, said that “talking about a drop in demand for oil is pointless.” According to the minister, “in 2023, demand will increase by an average of two million barrels per day.” According to OPEC’s latest estimates, this year demand should rise from 99.57 million to 101.91 million barrels of crude oil per day.