Crude slide to seven-month lows amid fear of global economy slowdown
Front-month ICE Brent has come down by $1.93/bbl on the day, to $92.42/bbl at 09.00 GMT.
PHOTO: Global oil demand could take a hit from recessions and lower economic activity. Getty Images
Upward pressure:
The prospect of Iranian crude returning to global market looks more uncertain. EU chief negotiator Josep Borell said on Monday that a revived nuclear deal could break apart due to diverging stances between the US and Iran.
US-Iran negotiations resumed last month in Vienna after Iran softened some of its key demands. The EU, which is mediating the nuclear talks, has said that both parties are unable to find common ground on a probe into Iran’s nuclear program by the International Atomic Energy Agency.
The US administration has said it is ready to adopt a revived deal if Iran complies with its demands. Meanwhile, Israeli Prime Minister Yair Lapid said his country will use all means necessary to prevent an agreement from being reached.
Downward pressure:
Renewed Covid-19 outbreaks in China and fresh lockdowns continue to threaten the country's oil demand recovery. Authorities in China’s Chengdu have kept the city's 21.2 million people in a Covid-19 lockdown since last week. Restrictions have eased in Shenzhen with many subway stations now back in operation, but its local authorities also remain on high alert for subvariants of the Omicron variant of Covid-19.
Brent values have plunged to seven-month lows. The crude benchmark's front-month contract has fallen below $93/bbl, down from nearly $120/bbl in June amid mounting concerns over weaker prospects for the global economy. "Fading the OPEC+ production cut bounce wasn’t that hard to do given a laundry list of global economic challenges," OANDA’s senior market analyst Edward Moya said.
In another bearish move, Saudi Arabia has slashed its official selling price (OSP) of term crude supplies to Asia for all grades in October, Vanda Insights reported.
By Nithin Chandran
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