The question marks hovering over the state of the Chinese economy have led to a slight decline in the price of oil on the global market. Investors expect that demand for the strategic raw material could fall due to China’s weakening economic growth.
The price of Brent crude oil headed south again after a brief upward swing. During Tuesday’s trading, it fell slightly to below $107 a barrel. At the end of last week, the price of oil hit the $110 mark, making it the most expensive since mid-April, when tensions between the West and Russia over the possibility of an oil embargo increased significantly.
Pessimistic development
Although the tense market situation still persists, it seems that the demand for oil is much more influenced by the state of the Chinese economy. Although it showed higher-than-expected growth in the first quarter, a rather pessimistic development is expected for the rest of the year.
Influence of epidemics
China’s flagging economic growth is being driven by a coronavirus epidemic that has gained momentum in two of China’s largest cities, Shanghai and Beijing. The Chinese government has therefore introduced strict restrictions, which have had, and will continue to have, negative effects on the local economy.
