Oil prices: Global demand could hit record highs as China reopens
Global oil demand is expected to peak this year thanks to China’s rapid economic reopening.
Oil demand rose by 1.9 million barrels per day to a record high of 101.7 million barrels per day, the International Energy Agency said in its latest monthly report on Wednesday.
“China will drive nearly half of this global demand growth, although the shape and speed of its reopening remains uncertain,” the IEA said.
Beijing began unwinding its strict zero-covid policy in December, paving the way for a resumption of travel, trade and business activity in the world’s second-largest economy. Most economists expect growth to slow in the first quarter of 2023.
The increase in Chinese demand may lead to the tightening of the global oil market, the “full impact” of Western sanctions on Russian oil. began to bite, reported the IEA report.
The Paris-based agency reported that Russia’s oil exports fell by an average of 200,000 barrels per day in December after the European Union banned crude oil imports from Moscow and G7 countries imposed fuel price caps. can be traded.
Brent crude, the global benchmark, fell after hitting a 14-year high of $139 a barrel in early March following Russia’s invasion of Ukraine last year. Prices began to recover in early December and rose 1.7% to $87 a barrel on Wednesday.
It is not clear where the price will be next. The IEA said there was a “high degree of uncertainty” about its forecast. Global oil inventories are at their highest level since October 2021, despite an expected drop in supplies from Russia.
Growing demand for electric cars and countries’ efforts to become more energy efficient could also help reduce demand, the agency said.
“Such measures are especially important in the oil market,” he added.
The IEA’s forecast came as business leaders expressed cautious optimism about the world’s ability to avoid recession in 2023 after months of bleak forecasts for the economic outlook.
That’s largely due to China, whose reopening is expected to spark a spending spree that could offset economic weakness in the United States and Europe.
Earlier this month, the International Monetary Fund said that about a third of the global economy could be in recession this year – usually defined as a drop in growth of two or more times.
In November, the Organization of the Petroleum Exporting Countries and its allies began cutting oil production by 2 million barrels per day, a policy that is expected to continue until 2023 as demand falls.
— Julia Horowitz contributed reporting.
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