China consumes record crude oil

Oil demand in China is growing faster than expected, which could further tighten the market and push prices higher, according to the International Energy Agency (IEA).

Earlier this week, the IEA released a report on the global oil market, in which it continued to raise its demand forecast to a record 102 million barrels a day this year, up 2.2 million barrels from last year.

China accounted for the majority of the increase, up 60%. Crude oil consumption in the country also peaked at 16 million barrels a day in March.

Although the latest economic data shows that China's recovery is still fragile, the IEA said that "the country's oil demand recovery prospects remain in line with forecasts." China is currently the world's leading oil consumer.

Beijing has been ramping up imports of Russian oil as it seeks to revive its economy after years of zero-Covid policies. It needs cheap energy to power its massive manufacturing industry.

Oil tanker docked at a port in Zhejiang (China) in January. Photo: Reuters — Oil tanker docked at a port in Zhejiang (China) in January. Photo: *Reuters*

The IEA report, published monthly and closely watched by the market, this time pointed to a growing gap between demand for crude in developing countries and Europe and North America, where the economic outlook is not very bright.

Demand is expected to boom in China and other developing countries. Conversely, high interest rates and rampant inflation in developed economies could dent demand there.

Western efforts to wean themselves off fossil fuels are widening the gap. Developing countries still rely on oil and coal as affordable fuels.

As demand is forecast to rise, supply is struggling to keep up. This year, global oil supply is forecast to average more than 101 million barrels a day, up 1.2 million barrels from last year.

The Organization of the Petroleum Exporting Countries (OPEC) began cutting production by more than a million barrels a day this month. US oil companies are also reluctant to invest in new production.

However, despite the IEA's forecast of a tense oil market, crude oil prices are still on a downward trend. Concerns about the health of the US banking system are the latest issue affecting the global economic outlook, putting pressure on crude oil prices.

Ha Thu (according to WSJ)

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