Opec expects demand will exceed pre-pandemic levels

The Organization of the Petroleum Exporting Countries secretary general Haitham Al Ghais said yesterday that the group expects oil demand to exceed pre-pandemic levels this year, reaching almost 102 million barrels a day.

Demand is projected to further rise to 110 million barrels per day by 2025, he said.

"Opec remains committed to supporting oil market stability," Al Ghais said in a speech at the Egypt Petroleum Show.

Meanwhile, China's state-owned oil refining giants are speeding up purchases of Russian crude, citing the allure of cheap cargoes from the Opec+ producer as demand recovered after Covid Zero was ditched.

China Petroleum & Chemical (0386), or Sinopec, as well as PetroChina (0857) and CNOOC (0883) have started and will continue to ramp up their procurement of Russian grades in the coming months, said people with knowledge of the matter. Shipments purchased include flagship Urals, which ships from Russia's distant western ports, as well as ESPO, which loads from pacific terminals.

PetroChina's project in Guandong was completed yesterday, which can process as many as 20 million tons of crude oil and is the only refinery base in China that can process all of the poor-quality heavy oil.

Further, the supply of synthetic resin products in South China alone can be increased by 2.5 million tons per year, significantly reducing the dependence on overseas chemical raw materials for household appliances, electronics and other industries in the Greater Bay Area.

It comes when oil prices rose more than 2 percent on Friday and posted weekly gains of over 8 percent, as Russia announced plans to reduce oil production next month after the West imposed price caps on the country's crude and fuel.

Russia plans to reduce its crude oil production in March by 500,000 barrels per day, or about 5 percent of output, deputy prime minister Alexander Novak said.

Opec country officials told Reuters that oil may resume its rally in 2023 as Chinese demand recovers after Covid curbs were scrapped and lack of investment limits growth in supply, with a growing number seeing a possible return to US$100 (HK$780) a barrel.

At the same time, US's January consumer price index on Tuesday is expected to increase 6.2 percent yearly, lower than the 6.5 percent growth in December.

But the possible rally of oil prices could affect the moderated inflation and thus the Federal Reserve's interest rate rise path.