Oil falls over bearish China data, looming Iran deal

By Sibel Morrow

ANKARA (AA) - Oil prices extended losses on Tuesday over growing fears of weak oil demand and a global economic recession over bearish data from China, the world's second-largest economy.

International benchmark Brent crude traded at $93.96 per barrel at 09.58 a.m. local time (0658 GMT) for a 1.19% decrease from the closing price of $95.10 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) was at $88.59 per barrel at the same time for a 0.91% drop after the previous session closed at $89.41 a barrel.

China's central bank unexpectedly cut rates to boost the economy affected by COVID-19 lockdowns and a property downturn.

The bank lowered the medium-term lending rate by 10 basis points to 2.75% from 2.85%, according to a statement by the People’s Bank of China.

Along with slower-than-expected industrial production and retail sales growth, China’s crude oil throughput in July decreased to its lowest level since March 2020.

China’s crude throughput decreased by 8.8% to 53.21 million tonnes, or 12.53 million barrels per day relative to the same month in 2021, according to data from the National Bureau of Statistics (NBS).

Signaling weaker demand, the bearish data from the world’s second-largest oil consumer prompted a 3% decline in oil prices during the previous trading session.

Prices came under further pressure after reports of a looming deal between Iran and the US, which, some experts believe, will bring an extra 1.5 million barrels per day (bpd) to the region over six months.

Iran said Monday the US administration “verbally agreed” to two Iranian demands for reviving the 2015 nuclear agreement.

"They need to adopt a realistic approach about guarantees,” Foreign Minister Hossein Amir-Abdollahian told a news conference in the capital Tehran.

"We have told them that our red lines should be respected...We have shown enough flexibility...We do not want to reach a deal that after 40 days, two months, or three months fails to be materialized on the ground,” he added.

“The prospect of more Iranian oil will still struggle to offset further losses in Russian crude, with European sanctions on Russia kicking in fully by the end of the year”, Australia and New Zealand Banking Group (ANZ) commodity strategist Daniel Hynes said in an e-mail.