Gunvor CEO: Global oil supply is growing faster than demand
Gunvor, one of the largest oil traders in the world, said that the global oil supply is growing faster than the demand.
Last week, oil prices fell to their lowest level in three years due to a slowdown in demand growth and concern about the global economic impact of President Donald Trump's protectionist policies.
Torbjorn Tornqvist, CEO of Gunvor, said that the demand for energy is still growing in the world but not by a large amount. He made this statement in an interview on the sidelines an industry conference in Houston.
The problem is "that's it."
Tornqvist stated that the demand for diesel and gasoline has plateaued in China, which is the second-largest consumer of these fuels. In China, the rapid adoption of electric vehicles has lowered gasoline demand. Meanwhile, a growing number trucks that run on natural gas have impacted diesel demand.
He said that the balance between supply and demand is loosening. The Organization of Petroleum Exporting Countries (OPEC) decided to increase production by a small amount each month starting in April, as they seek to reverse millions of barrels of daily cuts.
Tornqvist described the increment as so insignificant that it could be called a "rounding mistake". He added that the extra capacity the group had offline continued to have an impact on the market.
Tornqvist stated, "I believe that the fact that you have this capacity will always dampen prices."
Brent crude, the global benchmark oil, was trading below $70 per barrel on Monday after reaching its lowest level in December 2021 at $68.33 last week.
The CEO said that it was unlikely that U.S. producers of shale oils would increase production if crude oil prices fell another $5 to 6.
He said that uncertainty over tariffs, sanctions and their impact in the economy and energy industry contributed to the volatility.
He said, "It is uncertainty." There are so many variables. "We have some risk everywhere."
Tornqvist was unsure of how soon sanctions on Russian oil would be lifted, if Russia and Ukraine reached a peace agreement over the war.
He said that if the sanctions were lifted then Europe would probably go back to purchasing Russian oil and natural gas, but it is unlikely that all gas pipelines damaged or shut down would be brought back online.
He said that fuel demand in Southeast Asia is a bright spot and it continues to grow. (Reporting from Arathy S. Somasekhar, Houston; Editing and Marguerita C. Choy)
(source: Reuters)
