Oil price may exceed $120 if China overcomes Covid

S&P Global Vice Chairman Daniel Yergin stated that after the easing of restrictions against COVID, China's economy will reopen, and oil prices can reach $121.

Yergin explained that there will be an increase in demand in the market if China overcomes COVID. He also said that the main oil price level in S&P Global remains $90 per barrel of Brent, although a decrease to $70 is possible.

The expert says that in case of a global recession, a lower oil price level will be applied.

S&P Global predicts a possible increase in demand for crude oil in China next year to 15.7 million barrels per day. That is 700,000 barrels per day, more than in 2022.

Besides all that, supply remains limited, Russian supplies are redirected to Asia. Supply growth is limited by insufficient investment in new production.

BlackRock recently identified China and a possible recession as the driving forces for the oil market next year. It claims that many signs, particularly aggressive interest rate hikes by central banks, point to the inevitability of a recession.