Key facts
- Crude oil prices are expected to increase further.
- Global oil inventories have seen accelerated drawdowns.
- China's crude oil imports are estimated to be around 10 million barrels per day in September.
- China's September crude imports are expected to be 3 million barrels per day higher than in June.
- In the past two weeks, global inventories have decreased by 120 million barrels.
- Shipping risks in the Strait of Hormuz and the Red Sea are impacting crude oil supply to Asian refiners.
Crude oil prices are poised for further increases, driven by accelerating global inventory drawdowns and a significant return of China to crude oil purchasing, according to Amrita Sen, founder and market intelligence director at Energy Aspects. Sen told CNBC on Friday that the oil market has reached an "inflection point" and is heading for an "upward spiral" between crude and products.
Sen also noted that intensified shipping risks in the Middle East, including tanker attacks in the Strait of Hormuz and Houthi threats in the Red Sea, are hampering crude oil supply to Asian refiners. If these disruptions persist, Asian refiners may be forced to reduce their processing runs. She mentioned to Bloomberg earlier this week that China is estimated to import about 10 million barrels per day (bpd) of crude this month, which is approximately 3 million bpd higher than in June when imports fell to a decade-low below 7 million bpd.
These factors, combined with accelerating inventory drawdowns—totaling 120 million barrels globally in the past two weeks alone, according to Sen—are pushing crude oil prices higher, independent of geopolitical rhetoric. Oil prices had already surpassed $100 per barrel for the first time since July earlier in the week and were on track to end the trading week above that mark for the first time since May.