China’s decreased oil demand is playing a significant role in the global oil market, countering recent crude price surges, according to Citigroup (NYSE:C). Analysts there highlighted this shift on Monday, underscoring China’s growing significance in the oil markets, now comparable to OPEC+.

They pointed out that China has been transitioning from expensive crude imports to refined product exports and has amassed sizable oil inventories that exceed the 90-day global standard. This shift is suppressing oil price increases despite OPEC+’s supply cuts.

In addition to China’s pullback, overlooked new supplies from Iran, Iraq, Libya, Nigeria, and Venezuela have also been noted by the analysts as factors contributing to the current market dynamics. These sources of supply were not adequately considered by OPEC and the International Energy Agency (IEA), according to Citi.

Looking ahead, the analysts predict a surplus in the 2023 oil market with Brent crude prices potentially plunging to the low $70s per barrel. This is attributed to China’s pullback and fears of a US economic slowdown. They reminded that oil prices have recently slipped below $90 a barrel.

The declining oil demand in Europe and the United States was also recognized by the analysts as a factor suppressing crude price surges. As these major economies grapple with their respective challenges, their reduced demand for oil is impacting the global market.

In summary, China’s evolving role and behavior in the global oil market are becoming increasingly important. The country’s shift away from costly crude imports towards refined product exports and its large oil inventories are influencing global prices and supply dynamics.