The massive disparity between China’s enormous economy-driven energy needs and its minimal level of domestic oil and gas reserves meant that the country was the key driver of the 2000-2014 commodities ‘super-cycle’, characterised by consistently rising price trends for commodities.
Oil prices extended gains for a second session on Wednesday after a strong jump in manufacturing in China, the world’s top crude importer, boosted the outlook for global fuel demand.
Oil prices rose in Asian trade on Tuesday, supported by hopes a solid economic rebound in China will drive up fuel demand, offsetting worries about further U.S. interest rate hikes dragging on consumption in the world’s biggest economy.
China has reopened its doors following its long zero-Covid policy. But now governments and energy firms around the world are waiting to see what this means both for the energy industry and global supply chains. Experts are uncertain if the reopening of China’s borders means that business will resume as usual or whether ongoing disruptions will be seen due to years of closures and industry challenges.
Moscow mitigated restrictions on its energy industries, partially by granting favorable prices to China and India.
Whilst the U.S. and its allies appear to be taking a subtle approach to advancing their remaining interests in Iraq, as hinted at by the Qatar’s talks to buy a 30 percent stake in TotalEnergies’ US$27 billion project package, China seems to be taking a more direct route to what it wants.
Oil prices could return to the $100 per barrel mark in the second half of 2023 on the back of rising Chinese demand and expected limited additional supply, Afshin Javan, Iran’s OPEC representative, told Reuters on Wednesday.
Despite a relatively underwhelming rebound in Chinese demand, oil prices were pushed higher at the start of this week by the embargo on Russian oil products and the earthquake in Turkey which took an oil terminal offline
Oil prices eased on Friday, with major benchmarks headed for their second straight week of losses, as the market awaited further signs of fuel demand recovery in China to offset looming slumps in other major economies.
For the first time in decades, China’s oil and gas demand declined in 2022 as the strict Covid policies curtailed economic growth and mobility. This year, demand is set to rebound thanks to the reopening of the Chinese economy, pushing global oil demand higher and giving Europe a run for its money to stock up on LNG. The pace of recovery in Chinese oil and gas demand will be one of the most important trends influencing oil and gas markets and prices in 2023.