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China’s Relaxation of COVID-19 Measures to Drive Global Oil Demand to New Highs in 2023

According to a recent report from the International Energy Agency (IEA), China’s loosening of COVID-19 restrictions will drive global oil demand to a new record high this year, despite sanctions against Russia which will reduce the overall supply in the market.

The IEA notes that China and Russia are the key factors that will impact the direction of oil prices this year, with China’s increased demand expected to offset the reduction in Russian supply. While the exact details of China’s opening up to the country are still unclear, the IEA has previously warned that oil prices could rise in 2023 due to tighter markets following Western sanctions against Russia.

The IEA expects Russian oil production to drop 14% to 9.6 million barrels per day (bpd) by the end of the first quarter of 2023, while global oil demand is expected to increase by 1.7 million bpd in 2023 to 101.6 million bpd, largely driven by demand from China and India.

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