Oil prices fall amid geopolitical concerns and slowing global demand
Oil prices experienced a slight decline on Tuesday, as investors are cautiously dealing with multiple risks ranging from developments in geopolitical negotiations to fears of a slowdown in global economic growth.
Brent futures fell by 0.5% to USD 65.19 per barrel, while WTI fell to USD 61.80.
Factors of pressure on oil prices
- Geopolitical tensions and Ukrainian peace negotiations
US President Donald Trump announced that Russia and Ukraine will resume direct peace talks, which provoked cautious optimism in the markets.
However, concerns remain that any negative developments may re-disrupt Russian oil flows, especially with the continuation of Western sanctions.
- Nuclear talks with Iran have stalled
Iranian officials have stressed that their ability to enrich uranium is non-negotiable, reducing the chances of a quick agreement with the United States.
Iranian Deputy Foreign Minister Majid takhtaronji said that Tehran will not accept conditions that fully restrict its nuclear program.
Any delay in the lifting of sanctions on Iranian oil exports is considered a supporting factor for prices, but the faltering negotiations add to the uncertainty in the market.
- US credit rating concerns and economic slowdown
Moody's downgrade of the US credit rating exacerbated concerns about global economic growth, as the agency warned of a rise in US debt to 36 trillion dollars.
- Slowing Chinese demand and the impact of stimulus policies
Pressure on oil prices was increased by data showing a slowdown in the growth of industrial production and retail sales in China, the world's largest oil importer, as analysts expect a slowdown in fuel demand, influenced by a slowdown in various categories of oil products.
Even if China adopts stimulus measures, it may take some time to have a positive impact on oil demand.
Market forecasts and prices
Analysts expect oil price fluctuations to continue under:
- The unclear course of the Iranian nuclear negotiations and their impact on the global supply.
- The developments of the Ukrainian war and the possibility of a full return of Russian exports to the markets.
- Slowing growth in major economies, especially with the persistence of inflation and high interest rates.
