The outlook for China's economic growth, which is experiencing its worst performance in decades, is the trigger of greatest uncertainty in the global energy markets, according to a survey conducted with 200 industry professionals in the Gulf region.
Even at the Chinese Government's targeted growth rate of 7 per cent for this year, China's economy is heading for its slowest annual expansion in a quarter of a century, according to 32 per cent of respondents.
Producer prices slumped 5.4 per cent in July, credit to the real economy plunged and consumer inflation remains at about half the target of 3 per cent this year. Though many analysts believe the Chinese Government is exaggerating current growth rates, with independent analysis claiming they are closer to 6 per cent. The uncertain outlook has triggered the cancellation of many projects, jeopardising much-needed investment in long-term oil production capacity.
“We know that there will be an end point to the uncertainty as oil markets will balance again when increase in global demand is large enough to offset growth in supply,” Christof Ruhl, Global Head of Research, Abu Dhabi Investment Authority, said in reaction to the Survey results.
“It is important to understand the transition of the Chinese economy is what China terms as the re balancing of the economy away from industrial sector towards more service sector towards and more light economic activity,” he said.
Top energy industry officials and executives from the Gulf's national oil companies, including ADNOC, ENOC and KPC, alongside their international peers from Vitol, Gulf Petrochem, Socar Aurora, the Dubai Mercantile Exchange and Platts participated in the Industry Survey conducted last week by Gulf Intelligence Research. PTI