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Oil prices continued their downward trend on Tuesday, falling by more than 3%, after The Washington Post reported that Israeli Prime Minister Benjamin Netanyahu had assured US President Joe Biden in a phone conversation that he planned to strike the Iranian military, not oil or nuclear infrastructure, in retaliation for the Iranian strikes on Israel on October 1.
As a result, the price of a barrel of Brent crude from the North Sea, for December delivery, plummeted by 3.05% on Tuesday to $75.10. The American West Texas Intermediate (WTI) barrel, for November delivery, also fell by 3.05%, to $71.55.
On Monday, a barrel of Brent crude from the North Sea, for December delivery, had dropped by 2% to $77.46, and the American WTI barrel, for November delivery, declined by 2.29% to $73.83.
The drop in oil prices is further intensified by concerns about demand from China, the world's largest oil importer, whose economy is slowing down. Indeed, its exports have decreased, and imports remained weak in September, according to figures published on Monday, indicating a slowdown in industrial activity and signaling pressure on oil demand.
In this context, on Monday, the Organization of the Petroleum Exporting Countries (OPEC) lowered its global demand growth forecasts for the third consecutive time for 2024 and 2025, mainly due to uncertainty regarding Chinese demand. In its monthly report, OPEC reveals that global oil demand would increase by 1.93 million barrels per day (bpd) in 2024, down from the 2.03 million bpd growth forecasted last month.
China is responsible for most of the reduced targets for 2024, with OPEC cutting its Chinese growth forecast from 650,000 bpd to 580,000 bpd.
“Oil consumption in the world’s second-largest economy is facing headwinds due to economic challenges and the adoption of cleaner fuels,” OPEC explained.
Mixed Stock Markets
In the markets, the Tokyo Stock Exchange ended higher on Tuesday, while Chinese markets fell. The Hang Seng index in Hong Kong lost 2.37% to 20,968.87 points, while the Shanghai Composite Index dropped 1.40% to 3,238.42 points and the Shenzhen index fell by 0.80% to 1,875.04 points. In Tokyo, the Nikkei benchmark index finished up 0.8% at 39,910.55 points. The broader Topix index gained 0.6% to 2,723.57 points.
As for the Paris Stock Exchange, it held its breath on Tuesday, with concerns about the Chinese recovery and the sharp decline in oil prices. The CAC 40 lost 0.74% to 7,545.67 points, a drop of 56.56 points. On Monday, the Paris index closed with a 0.32% gain. Additionally, like all oil stocks, TotalEnergies was affected by the significant drop in oil prices, plunging by 4.05% to 59.96 euros.
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