Crude oil continues it recovery from its recent plunge as elevated geopolitical risks came into focus, ANZ commodity analysts note.

Jet fuel demand in China is on the rise

“Israel remains on edge as it prepares for a retaliatory attack from Iran following the assassination of Hamas and Hezbollah leaders. However, a call between Iran’s President Masoud Pezeshkian and French counterpart Emmanual Macron potentially opened a diplomatic path to de-escalation.”

“There is also no end in sight to the political situation that has closed Libya’s Sharara oil field. The National Oil Company has declared force majeure at the field, which was producing about 270kb/d before the closure.

One bright spot in the oil market is jet fuel demand in China. Total air traffic grew by 14% in June compared with the same period 2019. Domestic flights are up nearly 10%, according to government data. This is leading the country’s refiners to lift output of the aviation fuel to take advantage of improved margins.”