Asian oil demand is projected to rise 1.7 mil b/d in 2022. China, India to drive sustained oil demand revival despite Omicron. Refiners expect 2022 to be the strongest year for jet fuel since the pandemic started
FREMONT, CA: After a lengthy period of inconsistent growth, Asia's oil demand may now be on a steady upward trend, with consumption in China and India looking increasingly resilient, but how OPEC+ members organise their supply response will be critical in supporting this recovery.
After a lengthy period of inconsistent growth, Asia's oil demand may now be on a steady upward trend, with consumption in China and India looking increasingly resilient, but how OPEC+ members organise their supply response will be critical in supporting this recovery.
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The first decision by OPEC and its Russia-led partners to approve another increase in production quotas in 2022, based on the belief that the market can absorb more oil in the coming months despite rising COVID-19 infections, will be music to Asian oil importers experiencing a fragile economic recovery.
Although the full impact of omicron is still being studied, Platts Analytics predicts that Asian oil demand would climb by 1.7 million b/d in 2022, reaching 103 percent of pre-pandemic levels, up from 1.2 million b/d growth in 2021. Middle distillate consumption is predicted to increase by 1.0 million b/d in 2022, propelling growth.
Despite an increase in omicron cases, most nations in the area are moving toward re-opening their economies, except for China, which has a zero-COVID policy. Any lockdowns will most likely be more focused and confined, with less of an impact on oil consumption than in the past.
On Jan 4, the OPEC+ coalition confirmed a 400,000 b/d output increase for February, signalling continued confidence that the omicron version will have a smaller impact on world oil consumption than previously expected. Crude prices have been stable thus far, hovering around $80 per barrel.
The 23-nation alliance, which controls roughly half of global oil production capacity and implemented a record 9.7 million b/d cut during the spring 2020 market crisis, has been progressively recovering output in 400,000 b/d monthly increments, intending to resume pre-pandemic levels by late 2022. While there may be a short-term bump in Q1 due to China's tough lockdown and other countries such as India, South Korea, and ASEAN nations imposing restrictions on their economies and travel, the overall picture for crude oil is positive.