Oil Demand Is Likely To Increase In Global Market So Does Its Price

Oil Demand Is Likely To Increase In Global Market So Does Its Price

January 6, 2023 0 By Wiley McDermott

Experts hint at a surge in demand for oil, but electric vehicles are the biggest challenge.

Experts believe that the rapid adoption of electric vehicles is the only challenge keeping oil from a full-fledged market takeover.

The demand for crude will surge higher than the imagination of many investors and experts. The recent news that China has opened its economic activities full-time is the reason behind this surge. China is the biggest consumer of crude oil.

Moreover, experts have also said that if the demand for crude oil comes back to its normal in 2023, the daily oil consumption will be around 4.6 mbd (million barrels a day). This figure is far greater than the per day barrels in 2022.

Even market investors have yet to imagine that huge demand.

Pierre Andurand, the head of Andurand Capital, also said that the recent crude oil crisis was due to China’s zero lockdown policy.

He also added that this demand would last longer in the market. Even in the past, whenever the demand for crude oil declined, the crude oil made an even stronger comeback.

Andurand Think Electric Cars Are the Biggest Worry for Crude Oil Traders

Further stretching his argument, Andurand said that even though Chinese markets are now open, crude oil might not return to its fullest.

The reason behind this is the rapid popularity of electric vehicles. People in China, Japan, Germany, and the United States rapidly purchase electric cars. This means specific market factors across the globe are losing their market share.

That is why the demand for crude oil might not surge to its all-time high, but the daily industry requirement in 2023 is huge enough to turn the sector upside down.

On the other hand, he added that the Russia and Ukraine war is another reason crude oil demand might not peak in 2023.

But despite all these issues, Russia’s role will be decisive in fulfilling the industry demand.

Russia can provide 300,000 barrels per day of the total demand.

Because Russian oil is cheaper than other options, all the big market players will approach Russia to get the oil at a discounted price.

Gas Is another Factor Cutting Down the Supply of Crude Oil

A recent shift toward gas consumption is another reason that, in 2023, the demand for crude oil will not peak. Gas is also seeing an increase in market share.

Some big power sector companies are shifting their production units from oil to gas. As a result, the price of gas might also surge in 2023.

The future of oil is severely shaking in 2022 as per barrel price reaches its all-time low. Russia’s intrusion into Ukraine further intensified the situation.

As a result, the U.S. benchmark CL00 reached almost -1.42%, which was the 14-year high, and in the Month of March earlier this year, the per-barrel price of oil in the open market was $130 a barrel.

As the situation worsened, rumors spread that the international economy was heading toward another recession.

This has further destabilized the prices of crude oil. As a result, WTI crude oil reached $78 per barrel in the open market.

The turbulent economic indicators in 2022 also negatively impacted the stock market as the results energy sector tumbled as the stocks of the biggest energy companies crumbled.

However, as 2023 is around the corner, the market is showing positive signs regarding the supply of crude oil.

What could be Price of Crude Oil In 2023?

The market is heading towards stability; a recent report published by Forbes warned that Crude Oil is on its way back to recovery and can touch the $100 mark in the open market in 2023.

The high oil prices mean the price of gasoline will also go high. So, investors willing to invest in oil should hurry as chances are high that they can gain big on crude oil and gasoline.