Crude oil demand could be picking up again in China, but the market remains wary of increasing disruption to Russian supplies, Australia’s ANZ Bank said in a Wednesday note.
Oil trader Vitol said Chinese demand is recovering in a market that is struggling to increase supplies, driven by easing lockdowns in cities such as Shanghai and Beijing, the bank noted. Vitol forecast an increase of 1 million barrels per day in China’s oil consumption by the end of the year.
Meanwhile, the European sanctions on Russian oil have yet to kick in. Europe has received nearly 14 million barrels of diesel-type fuel from Russia since the invasion of Ukraine, ANZ Bank said, citing data from Bloomberg. This is a relatively limited drop off from pre-war levels.
Both Exxon Mobil and the International Energy Forum expect prevailing tightness in oil markets, according to ANZ Bank. Exxon sees tightness for another three to five years due to a lack of investment. The IEF also said the global investment is seen to be stagnant this year and may even decline as producers grapple with volatile prices.