Relaxation of COVID Restrictions: China’s Fuel Demand to Rise

After reducing COVID-19 limitations, road and aviation travel in China, the world's second-largest oil user, has returned substantially, raising fuel consumption and crude prices.

China last week relaxed quarantine, virus testing, and travel surveillance after almost three years of enforcing a zero-COVID policy.

Data from the transport ministry, travel analytics firms, and energy consultancies all point to an immediate and large increase in mobility due to the modifications. This is the first time road and air transport have increased in volume in nearly two months.

The world's energy market is keeping a close eye on China's progress toward mobility. This year, widespread lockdowns in the world's largest oil consumer are projected to cause demand to fall for the first time in two decades.?

Analysts at Morgan Stanley said in a note on Wednesday that because of the quicker rate of reopening, they anticipate normal mobility to be reached by the end of March 2023, instead of May/June.

Analysts at Bank of America Global Research have predicted that Brent, the international oil benchmark, could swiftly surge over $90 per barrel from the present $80, in part because to a "successful" economic reopening by China.

According to aviation data Variflight company saw a 68% increase in weekly domestic air passenger volumes comparing to previous week, reaching 3.7 million.

This was the largest increase since the Lunar New Year vacation in February. Even so, that is 37% less than the previous year and 68% less than 2020.

Data from the Ministry of Transportation shows that the number of trucks on the roads recorded its first weekly increase since early October.

According to Nomura, a trading firm, in November, areas producing about 20% of China's total GDP were under lockdown, provoking unusual protests against the strict COVID measures.