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Crude Oil Prices See Biggest Weekly Drop in a Year Amid China Slowdown
International crude oil prices logged their biggest weekly decline in a year, with Brent crude futures falling by 1.87% to $73.06 per barrel and US West Texas Intermediate (WTI) settling 2.05% lower at $69.22 per barrel. Brent crude fell over 7% this week, marking its largest decline since September 2022, while WTI saw an 8% drop, the most significant since October 2023.
China’s Economic Slump Weighs on Oil Demand
The sharp drop in oil prices is attributed to China’s sluggish economic growth in the third quarter, which has dampened global demand. Although September showed some improvement in consumption and industrial output, China’s overall economic momentum remains weak. As the world’s largest oil importer, China’s lower refinery output, driven by thin refining margins and reduced fuel consumption, continues to impact global oil demand.
Factors Driving the Price Drop
The decline in oil prices has also been influenced by the Organisation of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) lowering their forecasts for global oil demand in 2024 and 2025. Additionally, the rise of electric vehicle sales in China, which surged by 42% in August, is contributing to the downward pressure on oil prices.
Middle East Conflict and US Oil Production Surge
Geopolitical tensions in the Middle East, particularly between Israel and Hezbollah, continue to add uncertainty to the oil market. US crude production also hit a record 13.5 million barrels per day (bpd) last week, further affecting prices. Despite these concerns, US economic data showed some positive signs, with retail sales exceeding expectations in September.
As the market monitors the situation in China and the Middle East, oil prices remain volatile, with potential recovery dependent on future demand in key global markets.
