US-Iran Deal Could Lift Chinese Oil Demand, Fuel Global Inflation

A potential US-Iran deal may trigger a recovery in Chinese oil demand, and that could push global inflation higher. That is the view from Bloomberg Economics, which says the agreement, if it holds and restores energy flows to the world’s second largest economy, will change the picture for crude markets.

Bloomberg economists Chang Shu and David Qu noted that during the conflict, China acted like a shock absorber for global energy markets. The sharp drop in Chinese crude imports helped to soften oil price pressures even during one of the worst supply squeezes on record.

Now, with a deal in sight, that buffer may disappear. As Chinese demand returns, oil prices could climb again, adding to inflationary pressures worldwide. Traders and policymakers are watching closely.