Oil prices slipped on Tuesday, reversing some of the previous day’s 2% gains, as the U.S. ramped up efforts to broker a ceasefire in the Middle East. Simultaneously, concerns about sluggish demand from China, the world’s largest oil importer, continued to weigh on the market.
Brent crude futures for December delivery fell by 26 cents, or 0.3%, to $74.03 a barrel as of 0046 GMT. U.S. West Texas Intermediate (WTI) crude futures for November delivery dropped by 2 cents to $70.54 a barrel on its last day as the front-month contract. The more actively traded December WTI futures, which will soon become the front-month, declined by 23 cents, or 0.3%, to $69.81 per barrel.
On Monday, both Brent and WTI crude prices had rebounded nearly 2%, recovering part of last week’s 7% plunge, as tensions in the Middle East heightened the risk of supply disruptions. The market remains jittery over the potential impact of Israeli retaliation against Iran, which could destabilize the region’s oil supply.
U.S. Secretary of State Antony Blinken traveled to the Middle East on Monday in an effort to reignite talks to end the Gaza conflict and ease rising tensions in Lebanon. Israeli forces intensified operations in Gaza, surrounding hospitals and shelters for displaced civilians, with aid access severely limited.
Meanwhile, China’s economic outlook is also casting a shadow on oil markets. On Monday, China reduced its benchmark lending rates, following a similar cut last month as part of broader stimulus efforts aimed at reviving its slowing economy. Data released last week revealed that China’s third-quarter growth was its slowest since early 2023, fueling concerns about weakening oil demand.
Looking ahead, the International Energy Agency (IEA) expects China’s oil demand to remain subdued into 2025, as the nation accelerates the electrification of its vehicle fleet and grapples with slower economic growth.
However, Saudi Aramco remains optimistic about China’s oil demand in light of recent government stimulus measures aimed at boosting economic activity. The head of the state-owned oil giant expressed confidence on Monday that these initiatives will positively impact the energy market.
