In 2022, the price of crude oil had many spikes and falls. Prices reached their peak at the start of the Russian invasion of Ukraine and reached their lowest at the end of the year. Experts weigh in that the weakened economy and the strong wave of COVID-19 in China are the main culprits behind the decrease in price. Many now wonder what factors are likely to affect crude oil markets this year.
China's New Wave of Covid-19 Restrictions
Experts predict that an economic recession is likely to occur at the start of 2023, which may in turn have an effect on crude oil prices. For that reason, most find it unlikely that markets will again reach their 2022 peak. However, many argue that there still may be an upwards trend when it comes to prices. One of the most important factors in the equation is the strict Covid-19 lockdown in China. Experts believe that the country's current restrictions are likely to be lifted later this year. This would be a positive development for investors, as it would prevent the markets from going into a deep recession. China is also one of the world's largest importers of crude oil, so lifted restrictions will lead to increased consumption and therefore a rise in prices.
The Russian Invasion of Ukraine
The war between Russia and Ukraine is the second major factor in the price of crude oil. Experts don't expect that the current sanctions on Russia will have a strong effect on crude oil prices. However, a deescalation in military action may sharply increase crude oil supply and therefore cause a dip in prices. Although it's hard to make predictions when it comes to the current political climate, the outcome of the war will greatly affect oil prices.