Will oil prices return to $100 levels because of China?

Will oil prices return to $100 levels because of China?
Will oil prices return to $100 levels because of China?

Istanbul: International oil prices have not returned to levels of $100 per barrel of Brent, since the end of August 2022, for health, economic and geopolitical reasons.
Today, major global banks, led by Goldman Sachs and Morgan Stanley, have returned to talking about the prospect of oil prices returning to $100 levels again by the third quarter of 2023.
Crude oil prices currently range between levels of $82-86 for Brent crude, which are higher than those recorded at the end of 2022, at an average of $78.

China.. the password

At the end of last year, China began lifting various health restrictions on all its facilities and cities, marking the end of the “zero Covid” policy it had followed since the outbreak of the Corona pandemic at the end of 2019.
Life began to gradually emerge in many major cities, which were subject to strict restrictions, by the authorities, to prevent the spread of the virus, while supply chains began to resume their rotation.
China, under normal conditions, is the largest importer of crude oil in the world, with a daily average of more than 10.5 million barrels, and it is the second largest consumer with a daily average of 13.5 million barrels per day.
Consumption rises to the level of 14.5 million barrels per day, and in some periods 15 million barrels per day, due to its export of derivatives to the countries of the world.
However, domestic demand for oil declined over the past five months, by 15 percent, a decline that negatively affected global crude prices.
In front of the cancellation of the “zero Covid” policy, oil is preparing to make a strong advance after another turbulent period of trading that witnessed a drop in prices due to the health repercussions, and those related to the Russian war in Ukraine.
Oil prices could easily rise above $100 a barrel this year, as already tight supplies could face further challenges due to increased Chinese consumption.
Early this month, Bloomberg news agency quoted Rohan Reddy, director of research at Global X Management, as saying that China may add a large amount of demand for crude, which helps raise prices to $110.
He said that the reluctance of the Organization of the Petroleum Exporting Countries (OPEC) to increase production, and the possibility that the Federal Reserve will be more pessimistic than the bullish driving factors for oil.
However, the weightings during the first half of 2023 indicate the continuation of fluctuations in their prices, both in an upward and downward direction.

pressure coming from the west

As of next February 5, a new phase of European sanctions on Russian oil will enter, represented by a ban on imports of derivatives transported by sea to most European Union countries.
This decision, at some point, would push Russia to reduce production to match the actual demand for production, while the bloc countries search for other markets to meet their fuel needs.
This escalation in eastern Europe may lead to confusion in the oil market, and may reach a stage of shock that pushes prices upwards in the world.
There do not appear to be any indications that the Europeans will back down from their sanctions against Russian oil or fuel, especially with no solutions on the horizon for the end of the Russian-Ukrainian war.
Russia is the third largest producer of crude oil in the world, normally, and produces 11 million barrels per day, and exports about 5 million barrels of crude per day, and about 3 million barrels of derivatives per day.
In view of these data, in addition to the weakness of global investment in traditional energy (oil and natural gas), prices may again reach 3 digits for the first time since August 2022.





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