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World Oil Demand

OPEC Monthly Oil Market Report – September 2017

39

Middle East

Graph 4 - 11: Middle East oil demand, y-o-y

change

Graph 4 - 12: Saudi Arabian direct crude burning,

y-o-y change

Saudi Arabia

In

Saudi Arabia

, oil demand returned to positive growth after two consecutive months of decline, rising for

the third time only in 2017 by 0.14 mb/d to 2.8 mb/d in July, which equates to 5.4% y-o-y. Fuel oil demand

growth led the overall increase along with steady rises in transportation fuels gasoline and jet fuel, as well as

direct crude burning for the purpose of power generation. Those increases outweighed declines in diesel oil,

the ‘other products’ category and LPG. Demand for fuel oil was in line with seasonal trends, boosted by an

increase in capacity for oil-fired power generation plants as the country plans to expand the power

generation sector. High temperatures coincided with Eid holidays, which also provided support. Direct crude

oil for the purpose of power generation was also higher y-o-y as a result, adding 60 tb/d or 9% y-o-y.

Gasoline and jet fuel both rose, by 9% and 13% y-o-y respectively, in line with an uptick in summer driving

and school holiday seasons. Diesel oil demand, on the other hand, dipped by as much as 0.13 mb/d, or 17%,

y-o-y. The overall slowdown in economic activities in addition to the replacement of diesel oil in the power

generation sector in the southern and western regions resulted in lower demand in the country. Diesel oil

demand peaked in September 2015 when total consumption reached around 1.0 mb/d. Total consumption

for diesel oil stood at 0.63 mb/d in July 2017.

Iraq

July oil demand growth in

Iraq

was broadly flat, with total product consumption back below the 0.7 mb/d

mark at 0.67 mb/d. This data represents the slowest pace of growth so far in 2017. Product categories saw

mixed performance, while demand for transportation fuels – jet fuel, gasoline and diesel oil, along with fuel oil

– increased over the course of the month. Direct crude for power generation and naphtha lost ground,

dragging overall consumption lower.

Oil demand growth

in the Middle East in 2017 is foreseen to rise over 2016 levels, as economic momentum

gains pace y-o-y, while for 2018 the level of oil demand growth is anticipated to moderate slightly from 2017

levels. Oil demand in Saudi Arabia is expected to fluctuate during the reminder of the current year as a result

of consumer reactions to economic reform policies in the country. Demand from Iraq is projected to

contribute positively to oil demand growth in the region, along with IR Iran, the UAE and Kuwait, which will

provide support to a lesser extent.

Middle East oil demand

for 2017 is projected to increase by 0.11 mb/d, while oil demand in 2018 is

anticipated to rise by 0.10 mb/d.

-200

0

200

400

600

-200

0

200

400

600

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

tb/d

tb/d

Historical range

Historical average

2016

2017

Sources: Joint Organisations Data Initiative, national,

direct communication and OPEC Secretariat.

-300

-200

-100

0

100

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

tb/d

Sources: Joint Organisations Data Initiative,

direct communication and OPEC Secretariat.