🇬🇧 Braemar: “As China consumes ~ 20% of the world’s oil supply, a return to normality is viewed, by owners, as a wholeheartedly positive development for oil trade. This would benefit long-haul routes on the biggest ships, they say. Here are 3 reasons to temper that optimism.”
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1. A quick rebound in Chinese demand is likely to fuel global inflation and interest rates. This could dent demand for commodities in other countries – either through higher energy costs or lower spending power – thereby offsetting demand gains from China.
Western countries that rely heavily on imported commodities are at risk. Chinese oil demand growth will more than offset weakening demand in Europe and America, placing upward pressure on oil prices. Many forecasters are expecting oil prices to move north of $100/bbl during 2023.
* The global economy is already suffering from efforts by central banks to calm inflation.
* Oil supply may grow more slowly than demand this year.
* Russian oil supply is also expected to fall this year.
* Oil supply may grow more slowly than demand this year.
* Russian oil supply is also expected to fall this year.
2. The gradual removal of Covid restrictions has seen infections rise dramatically. A large body of sick people will reduce Chinese productivity. Alarm at the rate of contagion could trigger targeted lockdowns, or self-isolation – both of which could delay the economic recovery.
3. Heavy regulation of China’s refining sector distorts the mechanics of Chinese oil trade. Crude imports don’t necessarily rise (or fall) in line with demand.
/Fin
$STNG $ASC $TRMD $HAFNI $DIS.MI $INSW
/Fin
$STNG $ASC $TRMD $HAFNI $DIS.MI $INSW
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