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China’s Slowdown and Oil Production Cuts in Focus at Major Energy Sector Events

China’s Slowdown and Oil Production Cuts in Focus at Major Energy Sector Events

China’s slowing economic growth and a possible extension of oil production cuts by leading exporter Saudi Arabia are expected to dominate discussions as global energy executives and officials gather next week at two major industry events taking place in Singapore.

For the first time, the Asia-Pacific Petroleum Conference (APPEC) and Gastech will take place in the same week, creating what will be the largest gathering of the energy sector in Asia since the pandemic.

China’s weak growth after COVID-19, which has reduced demand for fuels and petrochemicals, will be an important factor at both events, while concerns about LNG supplies ahead of the northern hemisphere winter are expected to dominate talks at Gastech.

Hopes for a quick recovery in the world’s largest importer of crude oil and second largest buyer of liquefied natural gas (LNG) are fading fast due to a lack of political support, and its record oil inventories are key factors limiting global oil prices and spot LNG prices in Asia.

To support oil prices, leading exporter Saudi Arabia may extend voluntary production cuts for a fourth month in October, leading the supply cuts of the OPEC+ group of major producers, a move that Russian Deputy Prime Minister Alexander Novak said Moscow was also considering.

Despite this uncertainty, Amrita Sen, co-founder of consultancy firm Energy Aspects, said traders were largely optimistic about oil prices, but cautious about a correction in refinery profit margins after a recent recovery due to refinery outages and falling inventories.

“The biggest question is around product cracks and when will they disappear? added Sen.

India and China became Russia’s main oil customers for the first time after the war in Ukraine led to sanctions and a reshuffling of the global crude trade that led to the use of currencies other than the US dollar for payments, including the Chinese yuan and the United Arab Emirates dirham.

Russian oil exports have continued, even though prices have risen above the ceilings, as the West is keen to maintain world supplies and keep prices low. Meanwhile, the sanctions imposed by the US on Venezuela look set to ease, improving global supply, while Iranian oil, which is abundant and cheap, is heading towards China.

“The increased risk of geopolitical shocks is putting energy security back on the agenda as a priority for governments around the world,” said energy analyst Saul Kavonic.

LNG buyers, from China and Japan to Thailand and Bangladesh, rushed to secure supplies this year after spot prices in Asia cooled from record levels, reviving long-term agreements as countries prioritise energy security.

But imminent industrial action at Australian LNG plants has added new uncertainty as the markets approach winter.

While the balance of world LNG markets remains delicate, the long-term demand outlook is uncertain as major importers, including Japan and Europe, plan to reduce their use of fossil fuels.


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