By Adedapo Adesanya
It was not a good outing for the crude oil market on Thursday as prices fell as concerns over weaker economic growth offset expectations that crude demand could rebound in China.
During the session, Brent crude fell 0.7% or 36 cents to $111.68 a barrel while US West Texas Intermediate (WTI) crude fell 0.7% or 45 cents to 110, $90 a barrel.
Crude’s gains have been limited this week, with Brent and US benchmarks mostly trading in a range due to the uncertain trajectory of demand.
Investors, worried about rising inflation and more aggressive central bank action, reduced their exposure to riskier assets.
In China, however, demand for oil could rebound as authorities in Shanghai lifted some coronavirus lockdowns and residents were given the freedom to go out to shop for the first time in nearly two months.
China is the world’s largest importer of crude and the return of activity will help renew demand which has been affected by traffic restrictions.
Shanghai will reopen four of its 20 metro lines on Sunday as it slowly eases pandemic restrictions that have kept most residents in their apartment complexes for more than six weeks.
The city will also restart 273 bus routes connecting major urban centers, airports, train stations and hospitals as it resumes interdistrict public transport, said Yu Fulin, director of the Shanghai Transport Commission, on Thursday. , during a daily pandemic briefing.
The market also appears to be hesitant about the possibility of a European Union ban on Russian oil imports.
Earlier this month, the bloc proposed a new sanctions package against Russia for its invasion of Ukraine.
Those sanctions would include a total ban on oil imports in six months, but the measures have yet to pass as Hungary aggressively opposes it.
Meanwhile, Russia is ready to send any supplies rejected by European countries to other regions like Asia if the EU imposes an oil embargo.
This was revealed by the country’s Deputy Prime Minister, Mr Alexander Novak, who argued that Europe, which depends on Russia for around a quarter of its crude imports, should find substitute supplies that would be more expensive.
This should affect Iran, which is finding it harder to sell its crude now that more Russian barrels are available.
Iran’s crude exports to China have fallen sharply since the start of the war in Ukraine, with Beijing favoring heavily discounted Russian barrels, leaving nearly 40 million barrels of Iranian oil stored on offshore tankers in Asia and looking for buyers.