Uncertainty surrounding China's growth weighs on Brent

Front-month ICE Brent has slipped by $1.47/bbl lower on the day, to $84.28/bbl at 09.00 GMT.

PHOTO: Getty Images

Upward pressure:

The International Energy Agency (IEA) has forecast a "record" global oil demand of 101.9 million b/d this year, mainly due to China's rising demand for oil. The IEA has also warned that surprise production cuts by OPEC+ will lead to a supply deficit of nearly 400,000 b/d by the end of this year.

China's gross domestic product (GDP) in the first quarter of 2023 rose by 4.5% on the year, Reuters reports citing data from the National Bureau of Statistics. This has surpassed the 4.0% growth estimate given by analysts polled by Reuters. The Chinese government has set a 5% economic growth target for 2023.

Goldman Sachs has noted that the GDP data indicates that China's economy is on track to recover after the country relaxed most restrictions related to Covid. “Today's [China GDP] data are in line with our full-year bullish view for China growth," Goldman Sachs' chief China economist Hui Shan tells CNBC. Goldman Sachs has forecast China’s GDP growth at 6% this year.

Downward pressure:

On the flip side, China's economy grew by only 2.2% on a quarterly basis, compared with 2.9% in the fourth quarter of last year, according to Reuters.

OANDA's senior market analyst Craig Erlam has argued that China's GDP growth was largely driven by retail sales. The industrial production figures, on the other hand, were “less inspiring" and underscore economic difficulties this year, he says.

Reuters has reported that negotiations between the Iraqi and Kurdish governments are progressing. A ceasefire between Iraqi and Kurdish authorities will allow oil exports to resume from the Kurdistan region in northern Iraq through the Ceyhan export terminal in Turkey.

By Konica Bhatt

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