Ibekimi Oriamaja Reports
Crude oil prices fell yesterday as a result of dismal economic data from China, the world’s largest crude importer and second-largest consumer.
The news of a potential breakthrough in nuclear power negotiations with Iran adds to the sharp drop in oil prices, relieving pressure on crude oil markets.
According to Oilprice.com, Brent crude and WTI fell about 5% in trading to close at $94.18 per barrel and $88.18 per barrel, respectively.
The drop occurred after China’s Central Bank announced a surprise cut in lending rates in response to weak July economic data caused by the Asian country’s restrictive zero-COVID-19 policy.
The Chinese economy was further hampered by the country’s property crisis, which saw property investments fall 12.3% in July, the fastest rate this year.
China’s oil refinery data was also disappointing, with output falling to 12.53 million bpd—the lowest level since March 2020 and 8.8 percent lower than processing rates in July last year—due to unplanned shutdowns at state-owned refineries such as Sinopec and PetroChina, as well as shrinking refining margins.
In addition, the Chinese government has finalized plans to launch another round of tax investigations into private teapot refiners, which could cause refinery slowdowns. One-fifth of China’s crude oil imports are accounted for by teapots.
Meanwhile, Iran was a likely factor in Monday’s oil price movement, with the Middle Eastern country suggesting that a nuclear deal agreement could be reached within the next few days if the US considers its “red lines.” With a completed nuclear deal, Iranian crude will return to the global market, with more barrels of oil being sent into the market.
