According to Gary Ross, the CEO of Black Gold Investors, by the end of the year, oil prices may surge to $100 per barrel, as major producers continue their rationing of production output and the Chinese tourism sector sees a surging recovery.
While speaking Monday at the Asia Pacific Petroleum Conference (APPEC) in Singapore, Ross noted that although in the fourth quarter of last year domestic flights in China had only reached 75% of their pre-pandemic levels, the latest data shows Chinese airlines are running at 110% of their pre-pandemic levels. International flights have also recovered, from nearly non-existent to about 75% of their pre-pandemic levels. Following China rescinding their ban on group travels to most destinations last month, the recovery accelerated sharply.
In his speech, Ross predicted, “You’re gonna have a big increase in jet fuel demand probably of something like 500,000 barrels a day in China alone.”
He also pointed out that travel by road in Asia’s largest economy has been increasing as well. Because Chinese citizens prefer to use vehicles with gasoline engines to electrics for longer trips, this will likely produce a surging demand for gasoline as well.
He said, “Gasoline sales have been absolutely astonishing during the summer… People are driving like crazy. The year-on-year comparisons are going to be dramatic… I expect a huge increase in demand in the fourth quarter of 2023.”
At the same time, the supply of oil on the global market has been tightening, as major producers, including Russia, Saudi Arabia, and the OPEC+ alliance have engaged in a series of voluntary production cuts in an effort to boost prices.
Saudi Arabian crude shipments for July slid to their lowest levels in almost two years. As the global supply has tightened and reserves have begun to draw down, the price of European benchmark Brent crude has increased by almost 25% since late June, reaching over $90 per barrel on Tuesday. Ross predicted that the reductions in supply may have to be lifted as Brent’s price reaches $100 per barrel.