Oil prices fell on Monday, with US WTI slipping back below $90 a barrel, after disappointing data on the Chinese economy and the prospect of a nuclear deal with Iran that would allow to the market to recover the Iranian production. A barrel of North Sea Brent oil for October delivery fell 3.10% to $95.10.
A barrel of American West Texas Intermediate (WTI) for September delivery fell back below the $90 mark to $89.41, down 2.91%. An Iranian nuclear deal could lead to an end to sanctions, according to Iran’s top diplomat, a key member of the Organization of the Petroleum Exporting Countries (OPEC). According to Minister Hossein Amir-Abdollahian, his country was going to announce its “final proposals” on the nuclear file on Monday night, after, according to him, the United States accepted two of the Iranian demands.
“Iran is a central part of the offer”
“As the Organization of the Petroleum Exporting Countries (OPEC) is reining in its production increases, Iran is a centerpiece of supply,” Rystad analyst Aditya Saraswat told AFP. “There are still many boxes to check before signing an agreement,” he warns, but if all parties agree, the country could increase production by a million barrels per day in a few months, flooding a market where demand is weak. .
In China, two indicators showed Monday that the world’s second-largest economy, which gobbles up much of the planet’s crude output, is in bad shape. 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 Chinese central bank cut several of its key rates to support the economy. 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 that “clearly low 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
