Aramco CEO expects demand growth of 2 million bpd in second half

Saudi Aramco chief executive Amin Nasser said, on Tuesday, he expected oil demand growth of between 1.6 and 2 million barrels per day (bpd) in the second half of this year, adding that fundamentals do not support the current drop in oil prices.

Nasser, who heads the world’s most profitable oil company, said he expects global oil demand of 104.7 million bpd in 2024 and that some forecasts saw demand of more than 106 million bpd in the second half of the year.

Brent crude was trading at about $76.6 on Tuesday, its lowest since January. Traders said selling had been driven by expectations slower economic growth would reduce demand even as supply concerns mount because of tension in the Middle East.

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“The market in my view is overreacting and the fundamentals do not support the drop in prices that we are witnessing today,” Nasser said on an earnings call.

“The US is pointed (to) as a concern driving the current reaction that we are seeing in the market. Yet, the amount of finished gasoline supplies in the US, a proxy of demand, jumped to 9.4 million barrels a day in May, the highest since 2019.”

He also said he expected demand in China to increase in the second half of the year to 17.5 million bpd.

“I would also add there seems to be continued upward revision of demand by various forecasters and agencies, which makes it difficult to make informed investment decisions as the revisions keep surprising to the upside,” Nasser said.

Nasser also said he expected governments would replenish strategic crude inventories and that would further contribute to “healthy oil demand for the next few months”. He did not specify which ones.

Aramco earnings report

Nasser’s comments come as the Saudi energy giant released its earnings report for the second quarter of 2024.

Aramco, on Tuesday, reported a 3.4 per cent fall in second-quarter profit on lower crude volumes and softer refining margins.

Aramco posted a second-quarter net income of $29.03bn (SAR109.01bn) in the three months to June 30, beating a company-provided median estimate from 15 analysts of $27.7bn.

The energy firm declared dividends of $31.1bn for the second quarter, including $10.8bn in performance-linked payouts. Commenting on the results, Nasser said, “We have delivered market-leading performance once again, with strong earnings and cash flows in the first half of the year. Leveraging these strong earnings, we continued to deliver a base dividend that is sustainable and progressive, and a performance-linked dividend that shares the upside with our shareholders.”

“We have also continued to create and deliver both value and growth, as demonstrated by the positive investor response to the Government’s secondary public offering of Aramco shares and our recent $6bn bond issuance. Our drive to create value is supported by our distinctive long-term competitive advantages, our exceptional financial resilience through cycles, and our strong balance sheet.”

Read: Saudi Aramco Q2 profit drops 3.4% on lower volumes, refining margins