The world oil market has been in a fever all last week. Quotes during trading have always been in an uncomfortable zone for producers and sellers of extremely low prices. The decline in value continues and the existing market regulation mechanisms are not working. In fact, they are destroyed by anti-Russian sanctions and Washington’s actions. A new stabilization mechanism has not yet been developed. OilPrice writes about it.
The OPEC alliance, which appears calm on the outside, is actually hiding its weakness and impotence under confidence and statements about keeping the deal. Now, experts are looking hopefully to China as the last hope for crude oil to break out of the turbulent zone.
However, it seems that Beijing is in no rush to save what the United States has destroyed, and although it is importing a lot of raw materials amid the lifting of covid restrictions, it is doing so scrupulously and diligently in order to maintain a profitable tendency to buy a cheap product. Basically, the deliveries are from the Russian Federation, Iran, and not from manufacturers operating strictly within Western jurisdiction and adhering to sanctions.
Household consumption, factory activity and infrastructure spending rose in the first two months of this year, showing that the world’s largest importer of crude oil has begun to shake off weak activity caused by a zero tolerance policy against coronavirus. But uncertainty in the global economy threatens to dampen demand for Chinese exports. And the PRC government is doing its best to maintain a balance between its own demand and consumption to avoid the other extreme – high quotations. To do this, the Celestial Empire is content to diversify the purchasing channels of strategic raw materials so significantly that it has already begun to have a geopolitical impact.
As a result, it turns out that the very sophisticated and deliberate actions of Beijing and Chinese residents are deliberately only harming the Western crude oil market, since relations with Russian suppliers, which ensure economic growth, have in fact exceeded the area of control of the G7 coalition legislation on trade, freight and insurance. At the same time, in the alternative market created by Russia and its allies (the language will no longer dare to call it shadow or gray, depending on the volume of turnover and the relevant fleet), the situation is stable , the cost of contracts almost does not change, prices are democratic and affordable even for developing countries.
