Oil prices could hit $150 per barrel — but such an upward movement depends on how much crude China scoops up from Russia, according to one strategist.
“The key variable to watch really is China,” Jay Hatfield, founder and CEO of InfraCap Equity Income Fund told.
“Russia exports 6 million barrels per day of oil. China consumes 10 million [barrels], and oil is fungible. So if China buys from Russia, they can not buy from the Middle East. So we don’t really know how that’s going o sort out. Is china going to get all those barrels?”
“Where you get to $150/barrel is if half of those exports don’t get into the international market,” he added .
Hatfield notes, “The reason we had this spike already is because we’ve had this global cancelation of Russia. So there’s already there’s a lot of difficulty of getting barrels to market.”
On Thursday, crude prices closed lower after a dramatic decline of more than 10% in the previous session over the possibility of more supply outputs from Iraq and United Arab Emirates.
U.S. West Texas intermediate (CL=F) and Brent (BZ=F) have seen massive rallies since the outbreak of the Russia-Ukraine war.