Crude oil prices are rising on surging Chinese oil demand, increasing geopolitical risk factors boasts from Iran that they have built a "missile city” and Reuters reports of missiles and rockets hitting fuel tankers in northern Syria near the Turkish border, causing casualties. They are also reporting that OPEC production cuts have led to India relying more on the U.S. on oil imports. Reuters reported that the U.S. overtook Saudi Arabia as India's second-biggest oil supplier in February.

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China's oil demand continues to support the global oil market. China's oil demand increased 17% in January-February from a year earlier, to 13.326 million barrels a day, according to data compiled by Bloomberg. That snapshot considers domestic oil-processing volume and the net import of refined petroleum. Bloomberg also reports that more Chinese are taking to the skies, too, in a boost for jet fuel. Air-passenger volume rose to 23.9 million trips in February, according to the local civil aviation administration. That is approaching three times year-earlier levels.

Both China's demand and Indian demand for oil are exceeding pre-COVID levels and now in the U.S., gasoline demand is also recovering to almost normal levels. Gas Buddy data shows that U.S. gasoline demand last week was just 0.98% below the same week last year (considered pre-pandemic). It rose 2.9%. Patrick DeHaan tweeted WOW!

Iran is making demands on the Biden administration while upping the ante. Iran State Media says that the Iranian revolutionary guard is going to unveil a "missile city”, raising the risk factor in the Middle East. Yet at the same time Iran says according to Reuters that, “The United States should act quickly to revive Iran’s nuclear deal because once Iran’s presidential election period kicks off it is unlikely much will happen until later this year, Iranian Foreign Minister Javad Zarif said on Monday. Speaking at the European Policy Centre think tank, Zarif repeated Tehran’s longstanding demand that Washington returns first to compliance by lifting sanctions. Yet the Biden administration said that they would consult with Congress before moving to lift sanctions on Iran.

Rising demand for oil and underinvestment has been our bullish case for the last 6 months and why this oil rally is playing out exactly as we thought. The global oil market is on track to be undersupplied. We have seen a massive pullback in investment. The break below zero in oil at the apex of the coronavirus demand drop was a watershed event that created the consequences that will lead to a future oil shortage.