LONDON: Saudi Aramco CEO Amin Nasser expects oil demand to rebound in the second-half of the year as more countries ease travel restrictions.
He made the disclosure during an interview with IHS Markit Vice Chairman Daniel Yergin.
“The worst is behind us,” said Nasser. “I’m very optimistic about the second half of this year. We see it in China today – it’s almost at 90 percent. In gasoline it’s around 95 percent in China. Gasoline and diesel are picking up to pre-COVID levels. Jet fuel is still lagging in terms of less air travel. More countries will start opening up. So, we see that reflected in the demand on crude.”
The oil executive said that the pace of recovery would depend on whether there was a second wave of the COVID-19 coronavirus but that the experience of countries in dealing with the pandemic had made them better prepared for any recurrence.
“I think we are much better prepared now. All countries, all medical establishments are much better prepared. We learned a lot during the first wave,” he said.
He made his remarks as OPEC oil output drops to its lowest in two decades.
OPEC pumped 22.62 million barrels per day (bpd) on average in June, according to a Reuters survey published on Tuesday. That was a decline of about 1.92 million bpd from May.
The OPEC+ group which includes OPEC as well as Russia and some other producers, agreed to cut about 10 percent of global oil output from May 1.
The cuts have helped to support an oil price which dropped to as low as $16 in April, representing a 21-year low.
Now analysts expect the oil price to settle around $40-a-barrel this year according to the latest Reuters poll.
Nasser said that Aramco’s localized supply chain helped to mitigate against the impact of supply interruptions during lockdowns.
“We have seen a lot of plants and factories and suppliers that support Saudi Aramco from Europe, including China and other places – they had to shut down because of the lockdown. That impacted us for a while. But because of the optimum level of inventory that we have . . . a lot of things are being manufactured in the Kingdom – it helped us a lot.”