Oil prices continue to rise amid market deficit
Oil prices continue to rise, reaching their highest level since the beginning of March against a backdrop of increasingly tight oil markets. The price of black gold continues its slow rise as the market is in deficit due to the OPEC+ policy freeze, years of oil tanker underinvestment, Western sanctions against Russia, the reopening of the Chinese economy and the start of the summer season in the United States.
On the supply side, Western sanctions against the Russian oil sector have been the most important catalyst in recent weeks. These sanctions have forced Russia to reduce its exports, which puts additional pressure on the oil market, in particular on derivatives such as gasoline, since the country is a very important player in the refining of crude oil.
On the demand side, it is the reopening of the Chinese economy after several weeks of confinement in Shanghai and parts of Beijing that is currently supporting the market the most. Health restrictions have been lifted and the authorities have put in place a considerable stimulus program which should further support Chinese oil demand in the coming months.
The next major catalyst to watch will be Joe Biden’s visit to the Middle East in July. The American president will seek to convince the leaders of the region to increase their deliveries.