China's thirst for crude is set to continue to dominate the global oil market in the face of waning European and US demand, a news agency editor said yesterday.
Richard Mably, editor of Commodities and Energy at Reuters, said that there had been virtually no growth in markets such as the EU and US and that all eyes were on China, the Middle East and India for growth this year.
It is a trend that's set to continue, Mably added.
"The oil market is shifting and the Middle East is the pivot point. This is a view going out a long way for 2035. China will import more than 12 million barrels a day whereas the United States is going from 12 million to six million a day," he said.
He added that while prices were currently high, hovering at over $120 (Dh440) for much of the last week, this trend was unlikely to continue because of low supply.
"There's no doubt that demand is growing, but not enough to push prices up. Demand is not what is driving prices, it's supply. Yemen is not producing to capacity, Iraq has the capacity but isn't producing up to it either," Mably said.
Iran's oil output will also decrease with or without sanctions put in place, he said. Iran's crude capacity according to the International Energy Agency (IEA) is 3.7 million barrels a day.
"Without investment, which is extremely unlikely, Iranian crude production is going to fall anyway even without the sanctions which are in place at the moment," said Mably.
Following the sanctions placed on Iran by the EU and US with the aim of curtailing its oil exports, analysts are worried about an undersupply of oil. According to the US Energy Agency, excluding Iran from the global oil market would widen the gap between worldwide supply and demand six-fold based on February production.
When the oil embargo is due to be implemented on July 21 in Europe, Greece will be in the most difficult position and will need to find 30 per cent of its crude elsewhere. China is the biggest buyer of Iranian crude but, as one of the biggest importers of crude, Iran supply only makes up 6 per cent of its needs.
Crude oil gained yesterday after China said it would boost energy imports this year, though the Brent benchmark held well below a near four-year high set last week as Iran's offer of talks with major powers eased concerns about supply disruptions.
Front-month Brent gained 72 cents to $122.70 a barrel by 1415 GMT, after settling $1.82 lower at $121.98 in the previous session.
It was well below a high above $128 per barrel set last week, a level last hit in July 2008.
China's Trade Ministry earlier said it planned to boost energy imports this year, and will sustain policies to ensure stable export growth, which it expects to improve in the second half of the year.