Early Thursday trade saw a continuation of the rally in oil prices on optimism about China’s demand and growing worries about the effect of sanctions on Russian supplies.
By 8.35 AM (Thai time), the price of Brent crude had risen by 50 cents a barrel, or 0.6%, to $83.17, while the price of U.S. West Texas Intermediate crude rose by 50 cents a barrel, or 0.7%, to $77.91.
Demand for petroleum is expected to rise in 2023 as a result of China’s reopening of its economy after the lifting of severe Covis-19 curbs.
The Chinese Ministry of Industry and Information Technology reported that, despite production and logistics disruptions brought on by Covid-19 restrictions, China’s industrial output is estimated to have expanded by 3.6% in 2022 compared to the previous year.
As the EU continues to work on fresh sanctions on Moscow over the invasion of Ukraine, the market is preparing for additional curbs aimed at Russian oil sales slated to go into effect in February.
The U.S. Energy Information Administration warned that the EU’s ban on seaborne imports of petroleum products from Russia, set to go into effect on February 5, could be more disruptive than the EU’s restriction on seaborne imports of crude oil from Russia imposed in December 2022.
Meanwhile, Alexander Novak, Russia’s Deputy Prime Minister, stated that the country’s oil producers have not had any issue securing export deals despite Western sanctions and price caps.