Saudi Aramco Chief Executive Amin Nasser is confident crude oil demand will continue to rebound in the second half of the year, as coronavirus-related lockdowns slowly ease.
“The worst is behind us,” Nasser told IHS Markit Vice Chairman Dan Yergin at a CERAWeek Conversations event held online on Tuesday. “I’m very optimistic about the second half of this year,” he added, pointing to data in China that shows both gasoline and diesel demand had started to stabilize near pre-Covid levels.
IHS Markit had previously reported that Chinese demand had returned to 90% of pre-Covid levels by the end of April. “More countries will start opening up, so we see that reflected in the demand on crude,” he added, saying oil demand had already rebounded to around 90 million barrels from 75 to 80 million barrels in April.
The view from the head of Saudi Arabia’s state-owned oil giant is in line with IEA and OPEC projections, which see demand averaging 91.7 million barrels per day and 90.6 million barrels per day respectively in 2020. “There are different forecasts looking at between 95 and 97 million barrels of oil per day by year-end, so it will all depend on whether there will be a second wave of coronavirus or not,” Nasser said.
Analysts, including Vandana Hari at Vanda Insights, believe the recent spike in U.S. coronavirus cases is casting a shadow on the demand recovery oil markets. “The number of U.S. states rolling back or pausing reopening measures, which includes those past the pandemic peak, continues to grow,” Hari wrote in a research note to clients Wednesday.
The WHO warned last week that coronavirus outbreaks in the Americas haven’t yet reached their peak, with the United Nations health agency saying many countries in North, South and Central America were still suffering sustained community transmission. More than 2.6 million Americans have contracted the virus, sparking fears of prolonged social lockdowns in the world’s largest economy.
“I am also not as concerned about a second wave because I think we are much better prepared now,” Nasser said. “All countries, all medical establishments are much better prepared. We learned a lot during the first wave,” he added.
Analysts at UBS also suggest oil demand is gradually picking up, supported by a recovering global economy, but it was still “likely to be lower in 2020 and 2021 than it was in 4Q19,” the firm said in a July research note.