The demand for crude oil in major consuming regions, China and India, demonstrated weak demand in quarter-three of 2021, causing the Organization of the Petroleum Exporting Countries (OPEC) to revise its crude oil market forecast for 2021 to a reduced value of 96.4 million barrels per day.

The reasons identified by OPEC for sluggish demand in these countries primarily includes the ongoing energy crisis that has led to the slowdown of the economies. In addition to the unrelenting energy crunch, China also witnessed the squelching of the property sector in the third quarter that further crippled the country’s economy. While in India, the post-COVID19 pandemic recovery dawdled due to decreased workforce, low operating efficiencies and disrupted supply-chain network.

Crude Oil is a hydrocarbon composed fuel that is extracted by drilling from the natural reservoirs deep down the earth. Crude oil plays a highly significant role in the economic development of any country owing to its application in fuelling transport, generating electricity, and providing feedstocks for the burgeoning plastics industry, pharmaceuticals and agricultural sector.

As per the chemical market analysis by ChemAnalyst, the bearish crude oil market fundamentals in these countries are expected to linger in the fourth quarter of 2021 as well, thus signalling muted arbitrage across these major crude oil-importing regions. The global seaborne trade volumes from the exporting countries are expected to decline considerably causing the freight rates of oil tankers to decline, eventually leading both the producer and the shipment owners to lose profitability. This may cause overcapacity in the countries indulging in heavy oil exports thereby causing crude oil prices to slump down in these regions.

However, the oil tanker shipment is expected to regain activity in the second quarter of 2022 with the increase in crude oil demand backed by the wearing-off of the effect of COVID19 disruptions and the reversal of energy shortage trends. OPEC anticipates the crude oil demand to rise to 100.6 million per day in 2022.