Energy Prospectus

Bloomberg:

* China's easing of its zero-COVID policy will push oil prices to $100 a
barrel, Energy Aspects' Amrita Sen says.
* "This is going to be probably the single biggest driver of oil prices,"
Sen warned in an interview with CNBC.
* Oil prices have fallen recently, with Brent crude nearly flat for the
year.

Oil prices will head to $100 a barrel as China eases some of its restrictive
COVID-19 lockdown policies, according to Energy Aspects' Amrita Sen.

In an interview with CNBC on Monday, Sen pointed to the impact of China's
reopening, which is expected to exert more upward pressure on oil demand
globally.

"Chinese oil demand has been bottled up for three years now. And China has a
huge multiplier effect on the region," Sen said, noting that 25% of Korean
petrochemical exports and 20% of Thailand's tourism is linked to China.

"China reopening will be very very bullish for oil markets. Now, again, not
expecting that to be overnight, but over the course of next year, this is
going to be probably the single biggest driver of oil prices," she added.

The increase in demand will layer on top of other supply pressures, and comes
alongside the end of further releases from the US Strategic Petroleum Reserve.
Meanwhile, OPEC+ has stuck to its plan to slash production by 2 million
barrels a day.

Sen predicted West Texas Intermediate crude to soar into the triple-digits,
noting that US shale producers she's spoken to have said they are "not happy"
with the current price of oil, with Western Texas Intermediate crude currently
hovering around $70 a barrel.

Russia has also threatened to retaliate against the west's $60 price cap on
Russian oil, with Putin recently floating a production cut to raise oil prices
for nations that enforce the cap. JPMorgan warned over the summer that
Russia's retaliation against a price cap could push oil to $380 a barrel in
the most extreme scenario.

Sen said she believed Russia would continue to sell crude to friendly nations
like China and India, meaning a production cut would primarily impact and push
prices up for western customers.

"I think he might tactically turn off things here and there, but again,
directed toward the west, rather than his key consumers in the east," Sen
said.

The Bank of America has predicted that Brent could quickly go past $90 per barrel on the back of a dovish pivot in the U.S. Federal Reserve and a “successful” economic reopening by China, Reuters reports.

BofA has forecast that Brent prices--currently trading at $76.73--will average $100/bbl in 2023 thanks to Chinese oil demand recovery on a post-COVID reopening coupled with a drop in Russian supplies of about 1 million barrels per day (bpd). According to the investment bank, OPEC+ is likely to fully implement a 2 million bpd output cut in a bid to boost oil prices.

The forecast has come at a time when oil prices have been steadily declining due to fears that a weakening global economy would curb fuel demand. Last week, Beijing announced the most sweeping changes to its strict Covid-19 guidelines, including relaxing testing requirements and travel restrictions. Further, people infected with Covid-19 but have only mild or no symptoms are now allowed to isolate at home instead of convalescing in centrally managed facilities.

“Our oil demand and price projections for 2023 rely heavily on robust China and India demand growth, so any Asia reopening delays could affect our expected price trajectory,” said the bank, adding that the path to a post-pandemic environment may not be easy “given the low levels of immunity in China.”