The FT reports here that China’s energy executives anticipate a 25% drop in the country’s oil demand. That equates to a 3% drop in global consumption. China accounts for 16% of the global economy and an even larger share of its growth. With the stock market back at an all-time high, are investors being too complacent?
Sun Yu, Anjili Raval and David Sheppard write for FT:
“The epidemic has dealt a huge blow to our business,” said one executive at a Chinese refinery, who asked not to be identified because of the sensitivity of the issue.
An executive at another refinery said that if the spread of the virus peaked in the coming weeks, China’s oil demand could remain at least 10 per cent lower in March than a year ago.
“We are highly likely to see a 3-4m b/d impact [this month] when you consider the economy has virtually ground to a halt,” said Michal Meidan at the Oxford Institute for Energy Studies.
“Industrial activity is down, passenger movement is down 70 per cent, freight movement is down 50 per cent. The timing question is key. We know for sure there is an effective standstill for two weeks at least.”
If China can quickly contain the spread of the virus, less dramatic forecasts about the demand hit are more likely to prove correct. Chevron said last week it saw a hit of 200,000 b/d on average for the year.
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