The biggest crude oil buyers in the Asian market are India and China. The reducing demand for the oil has threatened the Asian as well as the global oil market. India and China are regarded as the two pillars of the petroleum and oil market, but eroding demand has increased the trade tension globally. Moreover, this has exposed the weakness of the Asian crude oil market. The two countries together buy more than 12 percent of the world’s oil and their growth has uplifted the global oil market since 2006. However, since July their shipped imports were nearly 50,000 barrels per day (bpd), whereas their January–June average was about 12.4 million bpd. This reducing oil demand has inflated the crude oil prices. Moreover, the sanctions with the U.S. and China-US trade war have supplemented the growth of the crude oil prices.
The Demand Will Continue To Slow Down
The factors such as the U.S. sanctions on Iran and the increased imports from Japan and South Korea resulted in rising oil prices. The shipping data clearly state that the annual growth from the top five buyers of Asian market including India, China, Japan, South Korea, and Taiwan has fallen from 3.5 percent in 2016 to nearly 2 percent in this year. Traders expect the downfall of the demand in future also owing to the trade conflict between China and the U.S. Moreover, the renewed trade sanctions against Iran, the world’s major oil exporter, will target the petroleum sector, disrupting the crude oil market further.
As per reported by Reuters, Sushant Gupta, the research director at energy consultancy Wood Mackenzie, stated that any further escalation in a trade war between the two major economies is a vital downside risk, and will lead to a slowdown in the Asian crude oil demand growth in the next year. This may lead to downward pressure on oil prices.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]