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The world’s biggest independent commodity trader, Vitol, has been revising down its global oil demand growth estimates and now sees growth at just 600,000 bpd-650,000 bpd this year, Vitol’s chief executive Russell Hardy told Bloomberg TV in an interview on Wednesday.
Next year, demand growth is set to pick up to around 800,000 bpd, according to Vitol, which has much lower projections about demand growth than the current forecasts of the International Energy Agency (IEA), OPEC, or the Energy Information Administration (EIA).
Yet, market participants right now appear to be slightly underestimating risks of supply disruptions, Vitol’s chief executive noted, after the tension in the Middle East and its key oil shipping lane, the Strait of Hormuz, flared up in recent months.
“The market seems to be putting its weight behind economic slowdown and trade wars and slightly under-pricing risk that supply could be interrupted,” Hardy told Bloomberg TV.
That said, demand growth is slowing, as is economic growth in countries such as China, Hardy says.
Several Wall Street investment banks have already warned that the escalating U.S.-China trade war raises the odds of an economic slowdown and subsequent low oil demand growth. Some banks have already cut their oil demand growth estimates for this year, saying that oil demand could grow at its slowest pace in at least half a decade.
In its latest Oil Market Report, the IEA said that oil supply outstripped demand by 900,000 bpd in the first half of 2019, warning that the oil market rebalancing has slowed down. In the July report, the IEA said that its outlook for oil demand growth in 2019 is little changed from the previous report and still stands at 1.2 million bpd.
But IEA’s executive director Fatih Birol told Reuters in an exclusive interview last month that the agency is cutting its 2019 oil demand growth projection to 1.1 million bpd in view of slowing global economy.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.