After last week China announced the next step in the fight against Covid-19 and for the first time in three years opened the borders of their country, the price of oil has started to rise in the world. According to the “Reuters” agency, about two billion trips are expected in the country during the celebrations of the Chinese New Year, or about 70 percent more than before the start of the pandemic. China has also increased its import quotas this year by about 20%.
Oil markets have reacted to the potential increase in activity in China, the world’s largest oil exporter. After last week’s biggest one-week drop in six years, oil prices are up again.
Currently the price of “Brent” crude oil is approaching about 80 dollars a barrel. However, fearing the possible spread of Covid-19 along with the influx of Chinese tourists, both “Brent” crude and US-produced oil are trading at discounted prices.
As explained by Vananda Hari, expert of the energy market analysis company “Vanda Insights”, to the television station “CNBC”, market operators look to the future with concern.
“During the last year, when Russian aggression in Ukraine had already started, we saw that China and India bought Russian oil in large quantities.
We are already seeing the impact on Russian crude oil exports and we are also waiting to see what consequences the introduction of petroleum product imports by the European Union will have on global commodity supply chains,” says Hari.
“In my opinion, these questions are still breathing at the bottom of the markets. Mainly because the markets are currently obsessed with future forecasts of the global economy and secondly with forecasts of the Chinese economy.
Moreover, the markets don’t really know how the export restrictions will affect the situation in Russia itself. All of this just shows that we have several very volatile weeks ahead of us until the picture becomes clearer.”
The ceiling on the price of Russian oil set by the G7 countries, 60 dollars a barrel, has been in force for just over a month, as has the European Union embargo on oil obtained in Russia. for oil imports by sea.
Due to the sanctions, Russian oil exports have reached their lowest level in two years, despite the fact that the price of Russian-produced Ural oil is currently about 35% below the market price and also below the maximum price set by the West – currently hovering around $52 a barrel.
For now, though, it’s hard to say whether that price will change after European Union sanctions on the import of Russian petroleum products take effect next month.
In general, experts predict that the price of oil could fluctuate between 90 and 92 dollars a barrel this year, to drop to 80 dollars next year.
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