CICC Sees Oil Demand Destruction Looming at $100
China International Capital Corp (CICC) has raised its forecast for fourth quarter Brent crude to $85 per barrel, up from $80 in June. This upward revision is due to a slower-than-expected restart of Middle East crude output since the third quarter and escalating regional tensions that are re-pricing the persistence of supply losses.
The bank's research note suggests that oil prices above $100 could lead to demand destruction, with end-user demand remaining weak despite a summer recovery in consumption. CICC warns against extrapolating this trend linearly, cautioning that higher prices may eventually weigh on consumption and limit further supply-driven gains.
Beyond crude, the bank's note highlights pressure building in product markets. Near-term increases in crude prices and freight costs are compressing refining margins across Eurasia, squeezing refiners' economics. Gasoline cracks face downside pressure from currently elevated levels, while overseas diesel markets show structural tightness and resilient crack spreads.