Rising demand for oil and natural gas in China has raised fears of further rising energy prices in the world market. Economic activities are picking up in China after the end of the Zero Covid policy. Along with this, the consumption of crude oil and other types of energy has also increased.
UBS Global Wealth Management Company has said in a recent report that there are signs of accelerating economic activity in China. Due to this, the demand for gas and jet fuel has strengthened. This is affecting the world energy market. In the futures trading of crude oil, the price is estimated to increase by 40 percent. In January itself, there was a huge increase in air travel in China. Because of this, the Chinese government increased the oil import quota by 20 percent for 2023.
The International Energy Agency (IEA) estimates that in 2023 the daily demand for oil in the world will reach 101.9 million barrels. This will be 2 million barrels per day more than last year. Also, this will be the highest level of demand in the last three years. In China alone, an increase of 900,000 barrels in daily demand is estimated.
Experts have pointed out that the number of people traveling abroad from China is still lower than before the epidemic. This year this number is expected to increase rapidly. Because of this, there can be a huge jump in the price of crude oil in the second half of this year. Investment bank Goldman Sachs has forecast that Brent crude will reach $100 by December this year and remain at the same rate in 2024. The brand is a measure of the price of crude oil in crude futures trading.
Experts have pointed out that oil production is unlikely to keep pace with rising demand. It is likely that OPEC Plus, the Organization of the Petroleum Exporting Countries, will continue with its current level of production. Russia is also a member of this organization. He has already announced a cut in his production. On the other hand, there is no possibility of any substantial increase in the production of shale oil in America.
The price of natural gas in the world market has dropped by up to 80 percent as compared to last year. This time due to the mild cold in Europe, the demand for gas remained low. That affected its cost. Now experts are watching whether China resumes direct purchase of gas. China stopped such purchases last year due to the stagnation of economic activities due to Corona.
Jun Inoue, the senior economist at Mizuho Research and Technologies, a Tokyo-based organization, told the website NikkeiAsia.com – If China's economy improves rapidly, efforts around the world to control inflation will be ineffective. If China can grow its economy by an additional two percent, the world commodity value will increase by four percent.
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