By Adedapo Adesanya
It was not a good outing for the crude oil market on Thursday as prices fell as worries about weaker economic growth offset expectations that crude demand could rebound in China.
During the session, Brent crude fell 0.7 per cent or 36 cents to $111.68 per barrel while the United States West Texas Intermediate (WTI) crude fell 0.7 per cent or 45 cents to $110.90 per barrel.
Crude gains have been limited this week, with the Brent and US benchmarks mostly trading in a range due to the uncertain path of demand.
Investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.
In China, however, oil demand could rebound as Shanghai authorities lifted some coronavirus lockdowns and residents were given the freedom to go out to shop for groceries for the first time in nearly two months.
China is the world’s top crude importer and the return of activities will help renew demand that has been affected by restrictions of movement.
Shanghai will reopen four of its 20 subway lines on Sunday as it slowly eases pandemic restrictions that have kept most residents in their housing complexes for more than six weeks.
The city will also restart 273 bus lines connecting major urban centres, airports, train stations and hospitals as it resumes cross-district public transit, Mr Yu Fulin, director of the Shanghai Transport Commission, said at a daily pandemic briefing Thursday.
The market also seems to be swaying about the possibility of a European Union ban on Russian oil imports.
Earlier this month, the bloc proposed a new package of sanctions against Russia over its invasion of Ukraine.
Those sanctions would include a total ban on oil imports in six months’ time, but the measures have not yet been adopted, with Hungary kicking aggressively against it.
Meanwhile, Russia is prepared to send any supplies rejected by European countries to other regions such as Asia if the EU brings in an oil embargo.
This was disclosed by the country’s Deputy Prime Minister, Mr Alexander Novak, who argued that Europe, which relies on Russia for around a quarter of its crude imports, would have to find substitute supplies that would be more expensive.
This is set to affect Iran, which is having a tougher time selling its crude now that more Russian barrels are available.
Iran’s crude exports to China have fallen sharply since the start of the Ukraine war as Beijing favoured heavily discounted Russian barrels, leaving almost 40 million barrels of Iranian oil stored on tankers at sea in Asia and seeking buyers.
