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Kuwait’s state energy company said customers are reluctant to increase oil imports next year, signaling that the market’s being suppressed by global economic weakness.
“We’re really nervous about where demand is going over the next few months and the next year, especially if there is a recession,” Sheikh Nawaf Al-Sabah, chief executive officer of Kuwait Petroleum Corp., said to Bloomberg TV late on Friday. “We’re talking to our customers. They’re saying that they either require the same amount of oil, or they’re asking for slightly less next year.”
The OPEC member exports about 2 million barrels a day of crude, most of it to Asian countries such as China, South Korea, Japan and India.
The Organization of Petroleum Exporting Countries, including de facto leader Saudi Arabia, have said that oil consumption is being affected by slowdowns in the US, Europe and China. The group and its allies, known as OPEC+, decided to cut production during a meeting in early October. That angered the US, which wants lower oil prices.
OPEC+ meets again on Sunday. Despite the weak outlook for demand, many traders and analysts expect it to hold output steady. That’s partly because members may want to assess the impact of a Group of Seven price cap on Russian crude exports that starts on Monday.
Diesel to Europe
Kuwait has invested tens of billions of dollars upgrading and building new refineries in recent years. That will enable it to boost exports of diesel and jet fuel to Europe in 2023, Sheikh Nawaf said. Those shipments will go a small way toward replacing flows of refined oil from Russia, which the European Union is set to ban from February as part of measures to punish Moscow for its invasion of Ukraine.
Kuwait exported its first jet fuel from the new Al-Zour refinery last month. The facility is designed to be able to process 615,000 barrels a day, making it one of the biggest refineries in the world. It is meant to be finished early next year, taking Kuwait’s total refining capacity to about 1.5 million barrels a day.
“It’s not going to be so much crude as product” when it comes to sales to Europe, the CEO said. An increase in Middle Eastern exports of diesel and other products to Europe is likely to be “permanent,” he said, with Russia forced to focus more on Asian markets.
Climate Goals
Kuwait believes oil will remain a key source of energy for the global economy even as countries transition to cleaner fuels and renewables, he said.
“It’s not something that’s going to happen overnight — it’s not an energy switch,” Sheikh Nawaf said. “In any transition, oil’s going to be there.”
As part of Kuwait’s aim to neutralize planet-warming emissions within its borders by 2050, it will invest in solar power and carbon-capture technology. That will enable it to lower the emissions-intensity of its oil production, he said.
“We want to take that carbon intensity essentially down to zero,” he said.
