news China’s reopening may be bigger for oil prices than Russia’s price cap

Singapore’s Foreign Minister Vivian Balakrishnan told CNBC on Tuesday that China’s reopening after the pandemic would be a bigger oil price driver than Russia’s oil cap.

“We expect to see a significant opening,” Balakrishnan said.

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Balakrishnan’s comments came after the G7’s $60 price cap on Russian offshore oil and a ban on Russian crude took effect on Monday. Russia claims these measures will not affect its actions in Ukraine.

Oil prices rose in Asian trading on Monday after China, the world’s largest oil importer, hinted at further easing of Covid-19 measures. Prices were also boosted by OPEC+’s announcement that it would maintain production cuts from November until the end of 2023.

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China’s oil demand has fallen by about 1 million barrels this year, according to Tortoise Capital portfolio manager Rob Sammel.

“Driving factors [China’s oil] Higher demand will obviously get the economy reopening, but more importantly, it’s building inventories,” he said.

“I think the world understands that energy security is very important as oil inventories around the world are low,” Sammer said. “So it will be a big engine going forward in both China and India, driving future demand growth, and again… it will likely lead to higher prices.”

China started easing some Covid measures

Several cities in China have recently relaxed Covid testing rules. On Tuesday, Beijing said a negative Covid test would no longer be required to enter most public or residential areas.

Read more about China on CNBC Pro

Last week, Chinese health officials announced new efforts to vaccinate more of the country’s elderly, highlighting that immunizations still prevent serious illness and death.

Balakrishnan, a doctor before entering politics, said China’s medium- to long-term strategy should focus on vaccination.

“If vaccination coverage is high, we can open up. So we would like to see what efforts China is making to increase vaccination of the elderly,” he said. rice field.

Balakrishnan said it is the city or state’s medical capacity that other variable authorities need to monitor before changing Covid protocols.

“We expect to see more diverse responses, which means there is no one size fits all,” he said.

Balakrishnan predicted that China could fully reopen within the next three to six months.

“Singapore has shown that … with smart, prudent and purposeful policies and preparations, [China can] Open, fully open. “

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— CNBC’s Lee Ying Shan and Evelyn Cheng contributed to this report.

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