Oil prices decline further

12 Jul 2022 , 08:21 AM

Fresh COVID-19 restrictions in China, the largest crude importer in the world, and concerns about a worldwide economic slowdown weighed on the outlook for fuel demand, which led to a decline in oil prices on Tuesday.

U.S. West Texas Intermediate crude for August delivery was at $102.50 a barrel, down $1.59, or 1.5%, while Brent crude futures for September dropped $1.47, or 1.4%, to $105.63 a barrel at 0057 GMT.

Numerous Chinese localities are implementing new COVID-19 regulations, like business closures and lockdowns, to stop the spread of infections of the contagious BA. There has been evidence of the 5.2.1 subvariant in the nation.

However, Western sanctions on Russia over the conflict in Ukraine, which Russia refers to as a “special military operation,” have hampered oil and petroleum trading. Russia, a significant supplier of oil, fuel, and natural gas to Europe, has also cut off other energy supply channels, which has merchants and utilities on edge.

After a Russian court overturned an earlier decision stopping operations at the pipeline for 30 days on Monday, concerns about a disruption to the Caspian Pipeline Consortium’s (CPC) system decreased.

However, traders and analysts continue to worry that Russia would shut down the pipeline, which transports oil from Kazakhstan to the Black Sea and might interrupt 1% of the world’s supply of crude.

Additionally, with most producers pumping at maximum capacity, the Organization of the Petroleum Exporting Countries’ spare capacity is running low.

When he talks with Gulf leaders in Saudi Arabia this week, U.S. President Joe Biden will argue for more OPEC oil production, according to White House national security adviser Jake Sullivan.

A decline in global crude oil prices will be seen as a positive for companies like Reliance and ONGC who have come under huge selling pressure since the government introduced new taxes.