The Executive Director of the International Energy Agency, Fatih Birol, stated on Monday that demand for oil from China and developing countries, along with supply cuts from OPEC+, is likely to lead to a continued tightening of supply in the second half of the year despite a slowdown in the global economy. Birol told Reuters, "Even with slow economic growth, demand from China and other developing countries is strong." He went on to say, "Considering the output reductions by major producing countries, we still believe we could see a tight supply in the market during the second half of this year."
The agency, based in Paris, reported last month that demand from the world's largest oil importer has rebounded after the lifting of COVID-19 restrictions, and countries outside the Organisation for Economic Co-operation and Development (OECD), which includes developed nations, will account for 90% of demand growth this year.
However, China, which also has the second-largest economy in the world, has recorded some weak economic data in recent weeks, with factory gate prices falling at the fastest pace in more than seven years in June, according to data released on Monday. Meanwhile, Saudi Arabia will extend its production cut of one million barrels per day through August, and Russia will cut crude exports by 500,000 barrels per day. Both countries are major oil producers in the OPEC+ bloc. OPEC noted in its monthly oil report for June that a stronger-than-expected economic recovery in China could be a potential factor driving the market upward.
