Oil bulls bank on China reopening, but several factors may curb commodity’s ascent

CRUDE oil bulls are making themselves heard again. Prices have dipped below pre-Russia-Ukraine war levels of below US$80 a barrel, after scaling as high as US$130 a barrel last March following Moscow’s invasion that sparked tightened market conditions for the commodity. But China’s reopening has got some thinking that a commodity price upcycle is afoot again.

The world’s second-largest economy is set to account for a third of global growth this year, according to analysts. Its relaxation of Covid-19 restrictions is expected to create another boom in air travel, renewing hope among oil bulls.

Jet fuel accounts for only around 7 per cent of total oil consumption but, according to Fitch Solutions’ forecast, will contribute over 25 per cent of total growth this year.