OIL

WORLD’S APPETITE FOR OIL TO REMAIN UNABATED IN 2025

Global oil demand year-on-year growth is expected to stand at 1.8 million barrels per day (bpd) for this year.  

Regions like OECD Americas, OECD Europe, and several non-OECD areas were revised upwards due to new data, while estimates for China, India, Other Asia, Africa, and Other Eurasia were adjusted down, for a net decline of 107,000 bpd, according to the latest monthly report of the Organization of the Petroleum Exporting Countries (OPEC). 

In the developed markets, oil demand is projected to rise by 0.2 million bpd, mainly due to growth in OECD Americas, with smaller increases in OECD Europe and the Asia Pacific. In non-OECD regions, demand is expected to increase by 1.7 million bpd year on year, driven largely by China and supported by India, Other Asia, the Middle East, and Latin America. 

Total global demand is anticipated to reach 104 million bpd in 2024, driven by strong transportation fuel consumption and healthy economic growth in non-OECD countries. Additionally, refinery expansions and increased petrochemical margins, particularly in China and the Middle East, are likely to contribute to this growth, OPEC estimated.

2025 POISED TO BE STRONG

Forecast for global oil demand growth in 2025 also remains robust at 1.5 million bpd – a strong increase compared to pre-pandemic levels. OECD regions are expected to see a modest 0.1 million bpd year-on-year rise, while non-OECD areas are forecast to grow by 1.4 million bpd, led by China and supported by the Middle East, India, Other Asia, and Latin America. Growth in 2025 is expected to be driven by robust air travel, strong road mobility – including diesel and trucking – and ongoing industrial, construction, and agricultural activity in non-OECD regions.

In Asia, where demand is set to rise the most, regional GDP is projected to surpass the 2024 growth rate. Accordingly, anticipated improvements in regional economic activity are projected to support the services sector. In addition, healthy air travel dynamics and recovering petrochemical sector requirements in the region are projected to support oil demand growth of 11,000 bpd, year on year, to average 7.3 million bpd in 2025.

OPEC also expects the positive impact of Chinese government fiscal stimulus in the fourth quarter to continue into the first quarter of 2025. 

“China is expected to remain the global leader in oil demand growth, with consumption increasing by 310,000 bpd, year on year, to average 17.1 million bpd,” OPEC noted in its November report. “China is also projected to lead global petrochemical feedstock demand growth, and jet fuel demand is projected to rise due to ongoing increases in air transportation.

Meanwhile, India, another major oil consumer, will see continued robust economic momentum in 2025. Furthermore, manufacturing and business activities in India are expected to remain steady, supporting a 239,000 bpd oil demand year-on-year increase next year, OPEC stated. 

ENERGY INVESTMENTS

Saudi Aramco reported in its third quarter results that it continues to execute the largest capital programme in its history as it invests in unique growth opportunities to seek accretive returns.

Capital expenditures for the quarter were SAR 49.6 billion (USD 13.2 billion), bringing year-to-date capital expenditures to SAR 135.7 billion, the company said in its latest quarterly results. 

Saudi Aramco’s income before income taxes and zakat for the nine months of 2024 was around SAR 609.7 million compared to SAR 685.03 million for the same period in 2023. Production stood at 12.7 million barrels of oil equivalent in the third quarter. 

“The decrease was primarily a result of lower crude oil volumes sold, weakening refining margins, and lower finance and other income. This was partially oset by lower production royalties primarily driven by lower crude oil volume sold compared to the same period last year,” the company said.

Saudi Aramco is also proceeding with several projects to support a strategy to expand and develop its gas and global LNG businesses. This includes the Jafurah Gas Plant, part of the Jafurah unconventional gas field development, were procurement and construction activities continue, with Phase 1 expected to commence production in 2025.

Meanwhile, construction and procurement activities progressed at the Tanajib Gas Plant, part of the Marjan development programme. The plant is expected to come onstream by 2025 and add 2.6 billion cubic feet per day of additional raw gas processing capacity from the Marjan and Zuluf fields.

In addition, the Hawiyah Unayzah Gas Reservoir Storage, the kingdom’s first underground natural gas storage, successfully completed its first full cycle of gas storage and reproduction. The programme can provide up to 2 billion cubic feet per day of natural gas for reproduction into the company’s Master Gas System.