Oil Daily | China's Petrochemical Demand Drives Oil Growth; Europe Shifts from Russian Energy Dependency

【Global Oil Supply and Demand】

China's oil demand will continue to be driven by petrochemicals even after transport sector growth peaks, says Vitol. This is due to the rising need for plastics. The International Energy Agency notes China's oil demand growth was largely from petrochemicals from 2021 to 2024. Road transport fuel demand still grows modestly.

【Oil-Producing Countries Dynamics】

Russia is willing to supply gas to Europe via Ukraine if agreements are reached. However, the EU is preparing to reduce reliance on Russian gas. Russian natural gas imports have significantly decreased, and Europe is adjusting to less dependency on Russian energy commodities due to geopolitical tensions.

Russian crude production in October was close to its OPEC quota. The country is implementing output curbs, and Russia, Iraq, and Kazakhstan have plans to compensate for overproduced crude volumes by September 2025. Analysts argue that OPEC will ensure promised cuts are followed through, with Saudi Arabia likely enforcing commitments.

【Latest Oil Policies】

Mexico's new government plans to boost state-owned power company CFE and set rules for private electricity producers, including renewable generation targets. The government aims to stabilize energy supply amid changes from past reforms, affecting private investment. The policy includes a $23.4 billion investment in CFE by 2030.

【Industry News】

Falling wind power generation in Europe has led to increased reliance on fossil fuels, raising electricity prices. The UK and Germany experienced low wind speeds, causing power prices to surge amid higher natural gas use. Some European countries withdrew natural gas from storage as renewables faltered.

【Company News】

Abu Dhabi's ADNOC signed a long-term supply agreement with Germany's SEFE for its Ruwais LNG project. The agreement commits over 7 million tonnes per annum of LNG production capacity to international customers. The Ruwais project, set to start operations in 2028, will focus on low-carbon LNG production.

The Dangote refinery in Nigeria has begun fuel production and is ramping up operations. The refinery, expected to meet Nigeria's domestic fuel needs and export excess, sees Vitol, Trafigura, and BP as major buyers. It has loaded nearly 45 million barrels of fuel, with diesel and fuel oil as key products.

The Greater Tortue Ahmeyim LNG project, operated by BP, is set to ship its first LNG from Senegal early next year. The project aims to produce LNG for over 20 years, establishing Senegal and Mauritania as global LNG hubs. The project has faced delays but is now on schedule.