China’s Economic Recovery Fuels Demand for Crude Oil
China’s oil market is experiencing a resurgence due to rising demand both domestically and globally, which could drive up global oil prices and give a much-needed boost to its struggling refining sector.
The economic recovery of the world’s largest oil importer and the end of Covid Zero restrictions have created a surge in travel during the Lunar New Year break and overseas demand for oil products due to the conflict in Ukraine.
This could lead to Brent futures reaching $100 per barrel for the first time in six months. The strong recovery of oil majors, such as Sinopec and PetroChina, is driven by drilling and processing profits, making them attractive options for equity investors.
However, there is also the possibility that China’s demand may not meet expectations, which could negatively affect prices. Additionally, a boost to oil prices may ignite global inflation and cause financial market volatility.
Despite these potential challenges, refineries are ramping up operations for profitable returns. A robust rebound in travel and the possibility of additional stimulus from the government’s budget could see China’s oil demand continue to grow gradually over the course of the year.