Aramco’s trading CEO sees recovery after ‘big hit’ from China abates
LONDON (Bloomberg) - Oil markets will begin to recover in the second quarter as the virus that has inflicted a “big hit” on Chinese demand abates, the head of Saudi Aramco’s trading unit said.
“By the end of April, we will not have that fear,” Ibrahim Al-Buainain, chief executive of Aramco Trading, said in an interview in London. “I am confident that the support and measures taken by countries will contain the virus.”
Oil prices have slumped to the lowest in a year, slipping below $50 a barrel in New York, as the coronavirus causes massive economic disruption in China and spreads throughout the world. Jet fuel demand has been “slashed” by about 300,000 to 400,000 barrels a day, mostly in China, according to Al-Buainain.
While the abrupt halt in the movement of people and commercial activity threatens to “create a huge dent in the global economy,” trading has so far remained resilient, said Al-Buainain, speaking after the official opening of the trading unit’s new London office.
The trading unit has requested its full monthly allocation of crude from its parent, which in turn is seeing normal customer demand from China, he said. The London office typically buys and sells about 300,000 to 400,000 barrels a day of crude oil, most of it produced by third parties rather than Aramco itself, Al-Buainain said.
Sentiment in markets had been upbeat just before the infection struck because Washington and Beijing were resolving differences over trade.
“Everyone was excited,” Al-Buainain said. “We were happy the trade war was moving in the right direction.”
Aramco aims to increase trading volumes of crude and refined products to 6 million barrels a day by the end of 2022, up from 4.5 million a day currently, he said. That’s a year later than the target Al-Buainain outlined in September, which also had been pushed back.
The trading venture enables Aramco to balance crude in the upstream and downstream parts of its business, and to offer customers greater flexibility, he said.