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World Oil Demand

OPEC Monthly Oil Market Report – August 2017

37

Saudi Arabia

In

Saudi Arabia

, the first six months of 2017 indicate a 3.0% y-o-y decline in oil requirements. The main

factors behind this are the sluggish volumes for crude direct use, as well as diesel oil, mainly in the industrial

sector, due to the substitution to natural gas.

Strong oil demand in the first six months of 2017 has been observed in Iraq. Demand for all main petroleum

product categories was solid, notably for crude direct use, gasoline, diesel oil, jet/kerosene and residual fuel

oil. Naphtha, however, saw a decline, which can be largely attributed to fuel substitution with natural gas.

Y-t-d, oil demand in 2017 also grew strongly in Qatar and the UAE.

The outlook for 2017,

Middle East

oil demand

remains positive with risks generally skewed to the upside.

Some factors that may curb oil demand in the region during 2017 are domestic petroleum product retail

prices, fuel substitution, as well as the economic development in the region’s main oil consumers. For 2017,

Middle East oil demand is forecast to grow by 110 tb/d, while oil demand in 2018 is projected to increase by

100 tb/d.

China

The growth in Chinese oil demand in June 2017 continued its strong growing pace with 4.5% y-o-y, in line

with strong economic growth, which mainly lifted oil demand in the transportation and industrial sectors. As in

previous months, demand for LPG and gasoline grew for one more month substantially on account of healthy

growth in the petrochemical industry as well as the road transportation and sectors. Gasoline demand added

a mere of 0.18 mb/d y-o-y, substantially higher than growth in similar months and in line with a rebound in

auto sales; the latter came mainly as a result of higher taxes imposed on auto sales as of March 2017.

Residual fuel oil demand rose by more than 13% y-o-y. Residual fuel oil is mainly used in teapot refineries,

whose capacities do not exceed 100 million metric tons per year. Moreover, diesel demand returned to

growth after declining in May 2017, y-o-y, as a result of usage in the transportation and industrial sectors.

The overall outlook for the Chinese oil demand for 2017 and 2018 is positive with risks remaining skewed to

the upside, mainly as a result of the projected economic growth in combination with a flourishing

petrochemical industry and upside potentials in the country’s transportation sector. Some downside risks are

related to fuel substitution in the industrial sector, in addition to efficiencies and alternative vehicle

penetration, electric cars and bicycles, in the road transportation sector.

Graph 4 - 13: Chinese apparent oil demand,

y-o-y change

Graph 4 - 14: Chinese diesel oil and gasoline

demand, y-o-y change

For 2017,

Chinese oil demand

is expected to grow by 0.36 mb/d, while oil demand in 2018 is projected to

increase again by 0.31 mb/d.

-500

-250

0

250

500

750

1,000

-500

-250

0

250

500

750

1,000

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

tb/d

tb/d

Historical range

Historical average

2016

2017

Sources: Argus Global Markets, China OGP (Xinhua News

Agency), Facts Global Energy, JODI, National Bureau of

Statistics of China and OPEC Secretariat.

-400

-200

0

200

400

Jun 16

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

tb/d

Gasoline

Diesel oil

Sources: Facts Global Energy, China OGP (Xinhua News

Agency), Argus Global Markets, JODI, National Bureau of

Statistics, China, OPEC Secretariat calculations.