With the increasingly fierce conflict between Russia and Ukraine, Europe and the United States plan to increase sanctions on Russian crude oil, but recently, the oil price has been "tepid". What is the truth behind it and where will the oil price go in the future? The latest topics are combed for your reference.
Why does the oil price continue to fluctuate when the EU strengthens sanctions against Russia? Weak demand and relatively stable supply
As the conflict between Russia and Ukraine heats up again, the oil price hovers around us $100110 / barrel, mainly due to the weak marginal demand and relatively stable supply. Recently, the conflict between Russia and Ukraine has heated up again, and Europe and the United States also plan to increase sanctions on Russian oil, but the oil price has been fluctuating around us $100110 / barrel. The underlying reason for the relatively "tepid" performance of oil prices lies in the weak marginal demand and relatively stable supply. According to the production and demand data from March to April, the total global crude oil production remained around 99 million barrels per day, while the consumption fell by more than 2 million barrels per day from about 100 million barrels per day.
Russia's exports did not fall, while the exports of the United States and Norway increased, keeping the crude oil supply stable; In the off-season of crude oil demand, China's consumption fell sharply, further dragging down demand. On the supply side, although Russia's crude oil exports to Europe fell by about 1.2 million barrels / day, Russia's exports to other regions increased significantly, supporting the overall export; The United States and Norway have increased their exports to Europe by about 1 million barrels / day to supplement EU crude oil imports. On the demand side, the end of the first quarter coincided with the off-season of crude oil demand. Under the background, consumption in China and other countries fell over seasonally, further dragging down demand.
The core logic behind the recent changes in crude oil supply and demand? Re export from India, release and storage from the United States, epidemic situation in China
Behind the stability of Russia's exports is the fact that India has become an important "transit station" for Russia's crude oil exports, driven by the absence of intervention and interests imposed by Europe and the United States. In the face of the continuous decline of Russian oil price and the superposition of 20% discount, India's crude oil import to Russia increased from about 30000 barrels / day in previous years to more than 700000 barrels / day in April. At the same time, India's imports of Russian oil are not used for Chinese consumption, but are more profitable through the re export of crude oil products to Europe. More importantly, considering India's special diplomatic role, the United States and other countries have not yet implemented strong intervention in India's oil purchase.
At the same time, the United States increased its exports to Europe by releasing reserves, while Norway mainly increased production; Behind the sharp decline in China's crude oil consumption is the outbreak of epidemics in many places. Since February, the US crude oil production has increased slowly, mainly through the release of 400000 barrels / day of strategic reserves to increase exports. At present, the strategic reserves have fallen to an all-time low. As a neighbor of the EU, Norway mainly increases its exports by increasing production by about 200000 barrels / day. In China, since mid February, a new round of covid-19 epidemic has emerged in many places, with logistics blocked and personnel control, dragging down the demand for crude oil by nearly 800000 barrels / day.
How will oil prices be interpreted in the future? With supply still limited and demand repaired, the rise in oil prices is worth looking forward to
India's re export is unsustainable, Iran's production increase is in doubt, OPEC and the United States are unable to increase supply, and crude oil supply may continue to be limited. Referring to the experience of Iran's sanctions, under the pressure of the United States and Europe, India's "tightrope" space may become narrower and narrower, and it may be difficult to buy a large amount of Russian oil. Iran's crude oil supply, which the market is worried about, still faces two major constraints, which may not be enough to impact the existing supply order. OPEC's weak production increase and strong demand for high oil prices, the United States' weak production increase and unsustainable release of reserves, and Norway's little room for further production increase are unable to change the situation of limited supply.
Under the background of limited supply, the inflection point of China's epidemic has appeared, economic activities have returned to normalization, and the arrival of the global peak travel season may be an important observation window for oil prices around the middle of the year. With the emergence of the inflection point of the epidemic, China's economic activities are also accelerating the return to normalization. For example, the vehicle freight flow index has rebounded to 93.6, close to the normal level. Globally, under the background of continuous supply constraints, with the gradual ebb of the epidemic and the arrival of the peak travel season, the demand for crude oil is expected to return to the improvement trend. Around the middle of the year, it may be an important observation window for the trend of oil price.
Risk tip: EU crude oil sanctions are less than expected; The global epidemic has rebounded strongly.
