Pierre Andurand, the legendary hedge fund manager of Andurand Capital Management, says if the world finally eliminates its Covid-19 restrictions and lockdowns in 2023, global oil demand could spike sharply.

He predicts that this year there could be a 4 million barrel increase, or 4% increase, in the demand for crude.

He said, “What would a full China reopening mean for world oil demand growth? If demand came back to trend in 2023, that would mean a demand growth of 4.6 million barrels a day vs 2022, way above most analysts’ expectations of 1-2 mbd… Overall, the potential to see a surge of oil demand of 3-4% sometime in 2023 is there, assuming the world reopens fully.”

He said he is also expecting many power plants to switch from natural gas to oil this year, and that will increase crude consumption as well.

He also pointed out however that the growing popularity of electric vehicles could limit the surge in demand, as electric vehicles currently reduce fuel consumption by roughly 600,000 barrels per day.

However he pointed out, the Russian military actions in Ukraine, which have resulted in unprecedented sanctions on the Russian energy industry, “could impact global demand by up to 300,000 barrels a day.”

Andurand noted there are other factors which could affect crude demand, such as changes in consumer habits, like people choosing to work from home and not commute, or cutting back on travel and business trips. However he maintains any impact from such factors would be, “marginal.”

Global oil prices briefly spiked in December as China began to back away from its zero-Covid policies. However prices began to decline again as it appeared the relaxation of those measures was triggering a more substantive outbreak of the virus.

Andurand’s main commodities fund was up roughly 50% last year, based on bets he made that supply chain disruptions and the Ukraine crisis would spike the price of oil and other commodities.