The Organization of the Petroleum Exporting Countries (OPEC) and its allies will have to contend with a “lot of demand issues” before raising supply in January 2021, given throughput cuts by oil refiners, the head of Saudi Aramco’s trading arm said.
For all the latest headlines follow our Google News channel online or via the app
OPEC and its allies plan to raise production by 2 million barrels per day (bpd) from January after record output cuts this year as the coronavirus pandemic hammered demand, taking overall reductions to about 5.7 million bpd.
“We see stress in refining margins and see a lot of refineries either cutting their refining capacity to 50-60 percent or a lot of refineries closing,” Ibrahim Al-Buainain said an interview with Gulf Intelligence released on Wednesday.
“I don’t think the (refining) business is sustainable at these rates (refining margins).”
However, Chinese oil demand is likely to remain solid through the fourth quarter and into 2021 as its economy grows while the rest of the world is in negative territory, he added.
Among the uncertainties facing the oil market are rising Libyan output on the supply side and a second wave of global COVID-19 infections, especially in Europe, on the demand side, Al-Buainain said.
Complicating efforts by other OPEC members and allies to curb output, Libyan production is expected to rebound to 1 million bpd in the coming weeks.
- Oil prices rise toward $41 on US Gulf hurricane shutdowns, outlook weak
- Saudi Arabia’s Energy Minister says the worst is over for oil market
- US sanctions Iran’s oil ministry, companies, officials for supporting IRGC-Quds Force
- Ending all closures, Libya’s NOC lifts force majeure on El-Feel oilfield
- Oil rises above $42 on prospect of extension to OPEC-led supply curbs
- Oil investment collapse creating energy crisis with global economy to suffer: IEF
- Too early to talk about future of oil output curbs, says Russia’s Novak