Oil likely to hit $121/barrel when China fully reopens: Yergen

Oil drilling platforms

Oil prices could vault as high as $121/barrel when China’s economy fully reopens following a string of COVID-related restrictions. However, there are major uncertainties looming over the market, S&P Global Vice Chairman Dan Yergin said.

In an interview with CNBC, he pointed out that S&P Global’s base case for Brent crude oil prices remain $90/barrel, although there is a downside potential for a slump to $70/barrel in case of a global recession.

Yergin warned of three key risks currently facing the market: The Federal Reserve's monetary policy decisions, Chinese oil demand and Moscow's response to the oil price cap that the G7 and European Union imposed on Russian crude imports on Dec. 5.

"If China gets over Covid ... then you add a lot of demand to the market," the executive was quoted as saying. That could be "one big boost" pushing prices to $121/barrel, building on strains caused by underinvestment in oil and gas, he added.