Worldwide demand for oil chipped away by China lockdowns, says IEA

The International Energy Agency has reportedly mentioned that China is having weaker oil consumption, where the economy is experiencing on-off Covid-19 lockdowns and is alongside offsetting strong crude demand worldwide and will hamper oil demand growth this year.

The IEA predicted that Chinese oil demand will drop by 420,000 barrels per day from last year to 15 million barrels per day this year, according to its assessment for the oil market.

The Paris-based organization reduced its 2023 China demand projections by 300,000 barrels per day, but it still anticipates that demand would increase to 16 million barrels per day when Covid-19 pandemic limitations are eased.

The second-largest economy in the world, China, is showing to be the worldwide laggard for oil demand. In spite of soaring inflation, rising interest rates, and sluggish economic growth, the demand for oil has remained remarkably strong in other countries.

According to the IEA, Middle Eastern demand is also strong as hot temperatures drive above-average demand for oil-fired electrical generation. Additionally, oil demand in the United States is proving to be greater than anticipated.

In the meantime, as gas prices in Europe skyrocket due to Russia's suspension of Nord Stream pipeline flows, there is a higher-than-expected increase in demand for oil as power plants convert to crude as a less expensive energy source.

While the majority of countries have virtually eliminated their pandemic-era mobility restrictions, China continues to impose harsh lockdowns in reaction to new cases under its zero-Covid policy, which harms economic growth and oil demand.

As per IEA, China's domestic oil demand is being hit most by the lockdowns, causing it to decrease its predictions for the country's domestic demand by 890,000 barrels per day.

However, the IEA said that China's problems are being offset by robust demand elsewhere and should only have a minor effect on the world's oil balances. The organization reduced its estimates of the growth of the world's oil demand for 2022 by a mere 100,000 barrels per day, to 2 million barrels per day.


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