Vitol CEO sees oil demand falling 3 million barrels a day

Global oil demand will fall by about 3 million barrels a day in 2026 and take a year to return to its level before the US-Iran war, Vitol Group Chief Executive Russell Hardy said at the Adipec energy conference in Abu Dhabi on Monday, November 2, according to Bloomberg. Hardy runs the world's largest independent oil trader, and his forecast is gloomier than the International Energy Agency's. The IEA projected last month that demand would fall by 2.6 million barrels a day this year, though Hardy's figure is broadly in line with a consensus that keeps getting more pessimistic, Bloomberg reported.bloomberg.com

A Thin Margin for Error

Hardy said demand could end the year about 3 million barrels a day below 2025 levels, Quantum Commodity Intelligence reported. Recovery may take more than a year, Energy Connects reported. He said the market has adapted but is not durable. Inventories are low, spare refining capacity is limited, and refining capacity is still offline in China, the Middle East and Russia. He warned that a seasonal lull could be followed by a hard spring as demand picks up.qcintel.com+1

In an essay published alongside the conference, Hardy wrote that excluding COVID-19, this is the largest recorded annual fall in oil demand. He said most of the drop has come from transport fuels and petrochemical feedstock, and that "only once prices return to long-term averages will demand rebound," according to Energy Connects. Vitol still expects demand to keep growing until the early 2030s.energyconnects.com

UAE Says Exports Topped Prewar Levels

At the same conference, UAE Energy Minister Suhail Al Mazrouei said the country's exports were at times higher than before the war, despite disruption in the Strait of Hormuz. "At a certain time, we did better than prior because of our continuous work," he said, The National reported. He gave no volumes. Kpler data cited by the paper showed exports of 3.94 million barrels a day in June, up from a record low of 2.13 million in March. Reuters reported that Abu Dhabi quickly expanded ship-to-ship transfers. Energy Aspects analyst Richard Bronze told Reuters that the UAE "has been producing above pre-war levels since June." Al Mazrouei also credited the Habshan–Fujairah pipeline, which bypasses Hormuz, according to Energy News Africa.thenationalnews.com+2

Buffers Running Low

In his opening speech, Adnoc chief Sultan Al Jaber said nearly 1 billion barrels have been drawn from global inventories since Hormuz was disrupted. "Simply put, the world has eroded its supply buffers," he said. He added that shipping and logistics have risen from under 5% to more than 30% of the cost of a barrel, OilPrice.com reported.thenationalnews.com+1