Economic Update – Baghdad
Oil prices remained stable near their lowest levels in two weeks on Tuesday, following weak economic indicators from China and rising expectations of elevated temperatures impacting demand.
Brent crude futures experienced a slight increase of 8 cents, reaching $77.18 per barrel by 02:20 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose by 2 cents to $73.19.
Brent closed on Monday at its lowest point since January 9, while West Texas Intermediate marked its lowest level since January 2.
China, recognized as the world’s largest importer of crude oil, reported an unexpected decline in manufacturing activity for January, raising concerns regarding the prospects for global crude oil demand.
Additionally, Chinese crude oil demand is under pressure due to recent U.S. sanctions affecting Russian oil trades.
Analysts from FGE foresee that refining capacities in Shandong could face a loss of up to one million barrels per day in crude supplies, particularly following a ban by the Shandong Port Group on oil tankers facing U.S. sanctions.
While alternative raw barrels are being sought to substitute Russian supplies, analysts indicate these options involve significantly higher costs.
India, the third-largest crude oil importer globally, is also navigating disruptions in Russian oil supplies. However, refining companies are capitalizing on the sanction interim period to secure purchases until March, according to FGE analysts.
In the United States, weather forecasts predict temperatures above the seasonal average this week, which could negatively impact heating fuel demand. This follows previous spikes in natural gas and diesel prices due to severe cold weather.
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