Oil falls on China demand worries

09 May Oil falls on China demand worries

Oil prices slipped on Monday, along with stock markets in Asia, 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 41 cents, or 0.4%, to $111.98 a barrel by 0603 GMT.

U.S. West Texas Intermediate crude was at $109.24 a barrel, down 53 cents, or 0.5%. Both contracts briefly turned positive after falling more than $1 earlier in the session.

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.

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.

Japan, part of G7 and one of the world’s top five crude importers, will ban Russian crude imports “in principle”, Prime Minister Fumio Kishida said on Sunday.

Bulgaria’s Deputy Prime Minister, however, said on Sunday that his country would veto EU oil sanctions on Russia if it does not get a derogation from the proposed ban.  

“The talks will continue tomorrow, on Tuesday too, a meeting of the leaders may be needed to conclude them. Our position is very clear. If there be a derogation for some of the countries, we want to get a derogation too,” Vassilev told national BNT television.