Crude oil prices slumped yesterday due to disappointing economic data from China, the world’s largest crude importer and second-largest consumer.
The sharp fall in oil prices is further exacerbated by the news of a potential breakthrough in nuclear power negotiations with Iran, easing the pressure on crude oil markets.
According to data from Oilprice.com, Brent crude and WTI plunged by about five per cent trading to close at $94.18 per barrel and $88.18 per barrel.
The drop occurred after China’s Central Bank announced a surprise cut in lending rates on the back of weak economic data for July triggered by the Asian country’s restrictive zero-COVID-19 policy.
The Chinese economic data was further dragged down by its property crisis, which saw property investments fall by 12.3 per cent in July-the fastest rate this year.
China’s oil refinery data was also a disappointment, with its refinery output dropping to 12.53 million bpd-the lowest level since March 2020 and 8.8per cent lower than processing rates in July, last year due to unplanned shutdowns at state-run refineries such as Sinopec and PetroChina and shrinking refining margins.
Also, the Chinese government has concluded plans to launch another round of tax probes on private teapot refiners, which can potentially cause refinery slowdowns. Teapots account for one-fifth of China’s crude oil imports.
Meanwhile, Iran also played a likely part in the oil prices movement on Monday with the Middle East country suggesting that a nuclear deal agreement could be reached within the next few days if the United States consider its ‘red lines’. A concluded nuclear deal will see Iranian crude returning to the global market with more barrels of oil sent into the market.
The International price of Crude have been on a steady rise since the Russian Invasion of Ukraine, the failure of Countries like Nigeria to meet the OPEC Production quota and the refusal of the Oil Cartel to increase production following Western Pressure to do so.
