Oil prices increased their losses on Monday after the head of Iranian diplomacy said that his country would send its “final proposals” on the nuclear file before midnight local time (9:30 p.m. Paris time). The possibility of an agreement that would allow Iranian production to return to the market, despite the fact that Chinese demand is suffering from an economic stagnation, made prices gasp.
A barrel of North Sea Brent for October delivery was down 5.18% at $93.08 at around 1150 GMT (1350 Paris time). A barrel of American West Texas Intermediate (WTI) for September delivery was up 5.27% at $87.24.
The black gold market is focused on negotiations around the Iranian nuclear agreement, which could lead to the end of sanctions on this key member of the Organization of Petroleum Exporting Countries (OPEC). According to Minister Hossein Amir-Abdollahian, his country will announce its “final proposals” on the nuclear file on Monday, after, according to him, the United States accepted two of the Iranian demands.
“If our proposals are accepted, we are ready to conclude [les discussions] and announce the agreement at a meeting of foreign ministers, “he added. “Until an agreement is signed, nothing should be taken for granted,” warns analyst Craig Erlam. in Oanda, who nevertheless foresees that the pressure on the Oil prices would intensify if negotiations are successful.
Disappointing data in China
Prices were also affected by disappointing data in China. In July, retail sales and industrial production experienced an unexpected slowdown, due to a rebound in Covid-19 and a real estate crisis that severely penalized activity. The episode of weakness in the Chinese economy “is weighing on oil and there is little chance of a rebound in the short term”, summarizes Bjarne Schieldrop, an analyst at SEB, in a note. He believes “quite clearly that sluggish Chinese demand explains the drop in oil prices since June.”
After soaring earlier in the year as demand recovered with the end of lockdowns and the start of the Russian invasion of Ukraine, prices fell by more than 20% in two and a half months.
Source: BFM TV
