Oil falls on China demand worries, possible EU ban on Russia oil eyed

Oil rig pumpjacks extract crude from the Wilmington Field oil deposits. (Reuters photo)

SULAIMANI (ESTA) — Oil prices slipped on Monday, sparked by weak China data and fears a global recession could dampen oil demand, with investors eying European Union talks on a Russian oil embargo that could tighten global supplies.

Brent crude lost $1.1 to $111.3 a barrel by 0911 GMT.

U.S. West Texas Intermediate crude was at $108.5 a barrel, down $1.28.

Both contracts briefly turned positive after falling more than $1 earlier in the session, according to Reuters.

“The broader risk-off sentiment sparked by the recession fears, and China’s lockdowns are the major factors that pressure the oil price,” Reuters quoted CMC Markets analyst Tina Teng as saying.

Global financial markets have also been spooked by concerns over interest rate hikes and recession worries as tighter and wider COVID-19 lockdowns in China led to slower export growth in the world’s No. 2 economy in April.

Crude imports by China, the world’s top oil importer, rose nearly 7% in April from a year earlier although imports for the first four months fell 4.8% on year, Reuters reported.

A price cut by Saudi Arabia also reflected worries over global oil demand, Teng said.

Saudi Arabia, world’s top oil exporter, lowered crude prices for Asia and Europe for June on Sunday.

Last week, the European Commission proposed a phased embargo on Russian oil as part of its toughest-yet package of sanctions over the conflict in Ukraine, boosting Brent and WTI prices for the second straight week. However, the proposal requires a unanimous vote among EU members this week.

The EU proposal was followed by a pledge by G7 nations on Sunday to ban or phase out Russian oil imports. Washington also imposed new sanctions against Gazprombank executives and other businesses.

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