One reason for the hypothetical decline is what is widely seen as weakening demand growth. The IEA recently estimated this growth at below 1 million bpd this year, the weakest since the pandemic lockdown period. Supply, on the other hand is, growing, notably from OPEC+, which earlier this year decided to start bringing back production after two years of cuts.
Yet prices right now are on the rise, with the drivers coming from the world of geopolitics. The United States and China are negotiating a trade deal and there are reasons for optimism, which is driving the benchmarks higher in anticipation of a return to normal trade relations between the world’s two largest economies.
The latest update from the negotiating table had a U.S. government official tell media that President Trump could ease chip export restrictions in exchange for China loosening its own new restrictions on rare earth exports amid rising panic in the carmaking sector about a looming shortage of essential components.
The chief of the White House National Economic Council Kevin Hassett said he expected the two sides to reach a deal on the issue during their talks in London, so Chinese rare earth magnets could return to international markets at normal volumes.
“Our expectation is that … immediately after the handshake, any export controls from the U.S. will be eased,” Hassett told CNBC.
China restricted rare earth exports in April, threatening a wide range of industries that use components featuring the elements with massive shortages, with carmakers warning they may have to start idling factories in a matter of weeks.
Credit: Oilprice.com
