Oil demand from Asia’s biggest importers, China and India, is growing more slowly than expected, exposing weakness in two of the world’s largest economies and eroding a key pillar of global petroleum prices amid trade tensions.
The two countries buy a combined 12 percent of the world’s oil, and their growth has helped drive the recovery in oil prices since 2016.
Yet their shipped imports in July were about half a million barrels per day (bpd) below their January-June average of 12.4 million bpd, shipping data shows.
That has dragged down demand growth in Asia, despite inflated purchases ahead of U.S. sanctions on Iran and increased imports from Japan and South Korea as they struggle with record-setting heat waves.
Shipping data shows annualized growth in demand from Asia’s five largest oil importers – China, India, Japan, South Korea and Taiwan – fell from more than 3.5 percent in 2016 to around 2 percent so far this year.
The effects of the economic slowdown will take time to manifest, but analysts say investors are already becoming cautious.
China’s investment growth in the first seven months of the year slowed to a record low of 5.5 percent, data showed this week.
Charters of super-tankers from the Middle East, on which Asia heavily relies to meet its oil demand, are dipping, according to ship brokerage Banchero Costa. Reuters