Oil: Chinese demand peak shifts market balance – Commerzbank
Commerzbank’s Carsten Fritsch notes that softer-than-expected US sanctions on Iran have added to downward pressure on Oil prices despite severe disruptions to tanker traffic through the Strait of Hormuz.
Commerzbank analyst Carsten Fritsch highlights how weaker-than-anticipated sanctions on Iran have contributed to falling oil prices, despite significant disruptions to tanker traffic in the Strait of Hormuz. Furthermore, China, the world's largest refiner, reports that its national oil demand likely peaked last year, and crude processing might have reached its peak, resulting in reduced import requirements.
If Middle East oil supplies normalize, lower Chinese demand could exacerbate market oversupply and drive oil prices down further. This trend is observed as oil prices have already declined by more than 2% yesterday. Despite Kpler's data indicating only two tankers passed through the Strait of Hormuz yesterday, the lowest count since early May, Commerzbank CEO anticipates a slight recovery in demand next year, contingent on easing US-Iran tensions.
However, he remains skeptical of returning to last year's levels. Consequently, Commerzbank assumes that Chinese oil demand peaked last year. This would mean lower crude oil demand for refineries, lessening import requirements in China and potentially leading to an oversupply of oil, which would further depress oil prices.
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