OPEC eyes on China economy’s recovery

OPEC eyes on China economy’s recovery

OPEC Secretary-General Haitham al-Ghais said on Monday that OPEC+ has been monitoring the market closely and stands ready to step in if necessary. He believes that as China reopens, the future economic outlook is more optimistic. OPEC previously predicted that nearly 30% of the increase in global oil demand this year will come from China.


Last week, Russian President Vladimir Putin had a phone call with Saudi Crown Prince Mohammed bin Salman to discuss cooperation in stabilizing the global oil market.


As the co-chairs of OPEC+, the attitudes of Russia and Saudi Arabia play an important role in seeking coordination and stability in oil prices and policies within the organization. At a subsequent meeting, the OPEC+ Joint Ministerial Monitoring Committee (JMMC) decided to keep the capacity plan unchanged pending a clearer outlook for the market to observe the impact of China's full reopening and sanctions on Russian crude oil and petroleum products. OPEC+ locked in the production reduction target of 2 million barrels per day reached in October at the end of last year, and it is expected to last until the end of this year.


The market generally believes that the greater hope for the energy market may be in the second half of the year. As the economy goes down and inflationary pressures come down, central banks including the Federal Reserve are expected to usher in an important policy shift window period, thereby boosting business activities and fuel demand. . The International Energy Agency (IEA) predicts that Asia's amazing economic resilience will strongly promote demand for oil, and China's (5.170, 0.02, 0.39%) demand recovery will turn the global energy market into short supply again from the second quarter of 2023 , a supply gap of 1.6 million barrels per day appeared in the third quarter, and the gap will widen to 2.4 million barrels per day by the end of the year.


Recently, financial institutions have taken a positive attitude towards China's recovery. Barclays predicts that China's full reopening could ultimately increase global oil demand by 1-2 million barrels per day. Bank of America Global and Goldman Sachs also recently released reports that the price of Brent crude oil is expected to return to $100 per barrel in 2023.

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