China's Oil Buying Spree Threatens to Send Prices Soaring

The oil market has seen a significant rally in recent weeks, with US crude prices topping $102 per barrel for its highest close since May. This comes after the futures contract surged about 50% from its summer low of $68.55 reached on June 17.

The escalation of fighting in the Middle East, including Saudi Arabia's East-West oil pipeline shutdown, has contributed to this increase. However, experts say that China's increased crude imports may be a crucial factor in determining whether prices sustain their rally and potentially reach wartime highs.

China has traditionally played a key role in keeping prices from skyrocketing during times of conflict by acting as a swing consumer. It has slashed its crude imports between 3 million barrels per day to 5 million bpd, but is now expected to increase them.

Rebecca Babin, senior energy trader at CIBC Private Wealth, noted that 'what isn't reflected is the fact that we may actually see a stronger demand pull for crude as refiners start to really try to ramp up in China, tightening the market further.'