This snippet is from an interview with the Head of Vitol Asia, Mike Muller (comes via Gulf Intelligence). On China's lockdowns and associated restrictions in the past few months (outbreak in China's largest city Shanghai and elsewhere):
- if it were not for the Chinese restraints on demands imposed by all these measures, the supply system would be more strained.
- So, it is really quite fortuitous I guess that we've had this set back in demand, which some for the month of April when Covid peaked in Shanghai was running at, most people put it close to 1 million barrels a day.
- That plus the SPR releases that then occurred in the trading time frame a little bit later are really what held the market back from perhaps having more explosive prices and staying in the very low one hundreds.
Muller says that:
- there is vaccination going on to ensure that the vulnerable parts of the population, the elderly, have their boosters in time for the probably inevitable point in time at some point, hopefully later this year when China relaxes some of these travel restrictions yet more and has the confidence to let the virus, well, to test the virus a little bit more by allowing the transportation side of the economy, which is the one that's held back, to run a bit harder.
The point about China's demand being lessened during the outbreaks has been made many times, but its useful to bear it in mind in the coming months. The consensus has been, for quite some time, that China will relax its 'zero' policy after Chinese President Xi is reappointed at the 20th Chinese Communist Party’s congress (expected in November). Muller points out though that there will be incremental relaxation of restrictions ahead of then.