Not Sanctions, Instead, Chinese Refineries Drive Oil Prices
World oil prices continued to weaken for the second consecutive day after traders began to doubt the effectiveness of US President Donald Trump's tariff threats against Russia. Brent crude fell below $69 per barrel, after dropping 1.6% on Monday. Trump had previously threatened to impose 100% tariffs if Russia did not end its war in Ukraine within 50 days. However, the market viewed this deadline as a temporary respite, not a direct impact on Russian energy exports.
According to analysts, including Giovanni Staunovo of UBS Group, the market had expected sanctions against Russia to be imposed soon, thereby tightening supply. However, because there was a 50-day window, the pressure on energy markets has not yet been felt. India and China are in the spotlight as they are major consumers of Russian oil, especially after the global oil market changed following Russia's invasion of Ukraine in 2022.
While the US tariff threat could have a significant long-term impact, oil prices are currently influenced by other factors. Brent has fallen about 8% since the start of the year due to trade tensions and OPEC+ efforts to increase production. Some analysts worry that global supply will exceed demand, creating a potential glut. However, short-term demand remains strong, as evidenced by the Brent contract still trading at a premium of more than $1 to the front-month price.
Amid global uncertainty, Goldman Sachs raised its forecast for Brent prices this semester by $5 to $66 per barrel. This is based on lower-than-expected oil reserves in developed countries, particularly the US and Europe. However, for next year through 2026, Goldman Sachs continues to project a price decline due to predicted stabilization of global supply and demand.
Meanwhile, in Asia, oil refinery activity in China is showing strong results. Government data shows that refining throughput rose to more than 15.2 million barrels per day in June—the highest level since September 2023. This indicates that demand in the world's largest oil importer remains quite healthy, counterbalancing the current global pressure on oil prices.
Source: (ayu-newsmaker)
