“We know fucking nothing more than anybody else does about oil prices.” So said Ryanair’s boss Michael O’Leary in his usual colourful manner at the European airline’s half-year earnings in November. Others have expressed similar sentiments over the years about how betting on the oil price is a fool’s game — although minus the swear words. Still, Lex bravely ventured forth last in January 2024 with a prediction that the days of $100 oil prices were over.
The logic was largely based on Chinese demand. Oil prices at $100 a barrel were not surprising in 2007 and 2011 given the explosive growth at the time in the Chinese economy. But the Chinese economy is changing — just take the continued strong expansion in electric vehicle car sales, for instance.
Of course, tensions in the Middle East have caused oil price spikes this year. Despite this, Brent crude prices are down about 3 per cent in the year to date. Persistent concerns over the strength of Chinese demand and other long-term macroeconomic factors have continued to largely override short-term gains to keep per-barrel prices stuck firmly in double-digit territory.