China's Demand Driving Global Prices China's surging oil demand is set to propel global oil prices, with Brent crude potentially reaching $100 per barrel.
On Monday, reports indicated that as China's economy gradually regains its vigor, several industry executives anticipate a significant increase in the country's oil demand in the fourth quarter. Specifically, the consumption of aviation fuel and gasoline is expected to see a notable rise, playing an instrumental role in driving global oil demand.
Ben Luckock, co-head of oil trading at Trafigura Group, highlighted that China's crude oil imports in the first half of the year were a clear bright spot. He anticipates that the annual demand growth from China will account for 40% of the global increase. Sinopec predicts that the consumption of aviation fuel in the latter half of the year might surge by 90% year-on-year.
Factors Influencing the Surge Gary Ross, a senior oil consultant at Black Gold Investors LLC, shares a similar perspective. He points to the rapid recovery of China's tourism industry and the supply restrictions by OPEC+ nations as indicators that there's still room for oil prices to climb. Ross observed that domestic flights in China have returned to pre-pandemic levels, which could significantly boost the demand for aviation fuel, potentially adding 500,000 barrels per day.
With major oil producers like Saudi Arabia and Russia making significant cuts to their supply, coupled with broader financial markets pricing in reduced recession risks for major economies like the U.S., oil prices have been on a three-month upward trajectory. Brent crude futures have soared nearly a quarter since late June.
Ross believes that by the end of this year, Brent crude prices could land somewhere between $90 and $100. Currently, Brent crude futures stand at $88.62 per barrel.
