Oil Prices Decline Amid China Demand Concerns and Middle East Ceasefire Talks

Oil prices eased on Monday as concerns about weakening demand in China, the world’s largest oil importer, weighed on market sentiment. Investors were also closely monitoring the progress of ceasefire talks in the Middle East, which could potentially reduce supply risks.

Brent crude futures fell 45 cents, or 0.56%, to $79.23 per barrel by 0646 GMT, while U.S. West Texas Intermediate (WTI) crude futures declined 58 cents, or 0.76%, to $76.07 a barrel.

Both benchmarks had nearly a 2% drop last Friday, driven by tempered expectations of demand growth from China. However, they ended the week mostly unchanged, supported by U.S. data showing moderating inflation and robust retail spending.

Over the weekend, Chinese customs data revealed a significant drop in diesel and gasoline exports for July, reflecting reduced crude processing levels due to weak profit margins. Additionally, recent data showed that China’s economy lost momentum in July, with new home prices falling at the fastest pace in nine years, industrial output slowing, and rising unemployment. This has raised concerns about a potential slump in demand from China, where refineries have sharply cut crude processing rates in response to tepid fuel demand.

Meanwhile, U.S. Secretary of State Antony Blinken arrived in Tel Aviv on Sunday as part of another Middle East tour aimed at pushing for a ceasefire in Gaza. However, Hamas expressed doubts about the mission, accusing Israel of undermining Blinken’s efforts. Despite ongoing mediation by Qatar, the United States, and Egypt, an agreement has yet to be reached, with violence continuing in Gaza.