Asia's oil demand outlook for 2022 is starting to look dimmer than what it was a couple of months back, as China's strict lockdowns aimed at battling the resurgence of the Covid-19 pandemic overshadow the positive oil demand signs emerging from the rest of Asia, said S&P Global Commodity Insights.
"Asian oil demand growth is expected to slow in 2022 as China's demand has been hit by a resurgence of Covid-19, with lockdown measures imposed across many major cities," said Lim Jit Yang, advisor for Asia-Pacific oil markets at S&P Global Commodity Insights.
Based on the latest April outlook, China's growth will be flat this year, after growing by 550,000 barrels per day in 2021.
Demand growth for the rest of Asia, excluding China, is expected to average 713,000 barrels per day this year, up from 660,000 barrels per day last year, despite the impact of high fuel prices, according to S&P Global's Platts Analytics.
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In contrast to China's zero Covid policy, many countries in the region continue to push for reopening of their economies, Yang said.
"Nonetheless, the improvement from the rest of Asia will not be able to make up for the vacuum left by China, with the region to see sharply lower growth this year versus 2021. Overall, we expect Asian oil demand to grow by 716,000 b/d in 2022, down from 1.2 million b/d in 2021," Yang added.
Platts Analytics has revised down Asia's oil demand growth forecast for 2022 to 716,000 barrels per day from the previous forecast of 1.08 million barrels per day, mainly due to China's consumption woes.
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"We have revised down China's oil demand to almost no growth this year owing to the demand loss in Q2. It remains uncertain whether demand loss in Q2 will be compensated by demand recovery in H2. That will increase the possibility of further downward revisions," Wang Zhuwei, S&P Global Commodity Insights' Asia oil analytics manager, said.