Chinese health restrictions and Russian exports will be the main catalysts in the short term
Oil prices chained a second consecutive week of decline last week against a backdrop of renewed uncertainty about demand. Oil prices are under pressure in the short term after unprecedented health restrictions were put in place in China, as the country experiences its worst wave of infections since the start of the pandemic. Authorities have placed the 26 million people of Shanghai, the country’s largest economy, under lockdown.
Oil prices are also affected by the decision of IEA member states to release 60 million barrels of their strategic reserves over the next six months, after the United States announced it would release 180 million barrels of their reserves.
On the supply side, the OPEC+ group has shown no intention of increasing its production targets beyond 400,000 barrels per day each month.
The evolution of the health situation in China and Russian crude exports will probably be the most important for oil prices. Although Westerners have stopped importing Russian oil due to the conflict in Ukraine, other countries like China continue to import it.