The price of the barrel of Petroleum Brent, reference in Europe, has come to fall this Monday to 80.61 dollars, a minimum not seen since January 10, and has already lost all the ground gained during the first half of the year driven by the Russian invasion of Ukraine. The European oil price loses all the ground gained in 2022; Chinese protests raise fears for lawsuit
After several weeks down, the Brent price today registered an abrupt fall of 4.07% compared to Friday’s close, motivated by fears that the new restrictions against the coronavirus in China will weigh down demand from the world’s largest importer of crude oil.
Also contributing to the decline was the prospect that the cap on the price of raw Russian that the G7 countries are negotiating is finally above what some analysts expected and will cause fewer supply restrictions than expected, various experts told Efe.
The price drop is “good news for consumers” and the economies of oil-importing countrieshas pointed out Michael Hewson, analyst at CMC Markets.
The experts are advancing at the same time that the Organization of the Petroleum Exporting Countries (OPEC) and its allies (OPEC+) could evaluate at their meeting next weekend measures to boost the price of a barrel of crude oil again.
Less demand from China
The wave of protests in China in recent days against the restrictions to try to stop the spread of coronavirus has focused on the blow that these measures will bring to the economy of the Asian giant.
As a result of the mobility restrictions that have been announced in the face of the latest covid outbreaks, there is fear that the demand for oil will be affected,” Fawad Razaqzada, a market analyst at the consulting firm StoneX, told Efe.
It might interest you: ‘Zero Covid’ policy in China unleashes wave of protests and arrests in different cities
Crude demand from China may fall by around 1 million barrels a day in December compared to the previous month, Edward Gardner, an analyst at Capital Economics, has estimated.
The social unrest has also created “great uncertainty about the (Chinese) economy in the short and medium term,” Craig Erlam, of the Oanda firm, has highlighted to Efe.
Limit on Russian oil
The G7 countries and the European Union failed to agree on a cap on the price of Russian oil last week and continue to seek an agreement.
The United Kingdom, whose insurance market processes 60% of global maritime transport civil liability policies, has already advanced that it will prohibit from December 5 to provide any service to transport Russian oil sold above the limit set by the Western allies.
There is speculation that the G7 cap will be set near the current price of Russian exports, which would result in less of a disruption than it would be if the price were set closer to Russia’s marginal cost of production,” according to Gardner.
The EU, in particular, “is talking about a level that will hardly threaten Russian production,” Erlam agrees.
Of course, OPEC+ could have a say on prices this weekend, depending on how things progress,” the analyst added.
Razaqzada has stressed that the group of oil countries, which includes Saudi Arabia and the United Arab Emirates, as well as Russia, “could decide to cut their production more than expected” in order to force a rebound in the price.
The last:
EFE International news agency based in Madrid and present in more than 110 countries.