Asian oil prices continue to fall

At 13:07 (Vietnam time), oil prices Brent fell $1.19, or 1.1%, to $104.75 a barrel, after falling to an intraday low of $103.19 a barrel.

Oil prices in Asia continue to fall. (Illustrated image – Photo: Getty Images)

The price of US light sweet crude (WTI) fell $1.07 (1%) to $102.02 a barrel. Earlier in the session, this oil fell to a session low of $100.44 per barrel.

The dollar’s proximity to a 20-year high also makes oil more expensive for traders holding other currencies.

On May 9, both benchmarks posted their biggest intraday percentage declines since March, losing 5% and 6% respectively.

The drop reflects trends in global financial markets, as investors flee riskier assets.

ING’s head of commodity research, Warren Patterson, said a range of factors include the COVID-19 situation in China, the tendency of central banks to raise interest rates and the risk of a recession. The growing economic downturn is not supportive of risky assets.

“The lockdown in China has had a negative impact on the oil market, which is selling off along with equities,” said Andrew Lipow, president of Lipow Oil Associated in Houston.

In the first four months of 2022, China’s crude oil imports fell 4.8% from a year ago, but April imports increased by nearly 7%.

China’s oil imports from Iran in April reached their highest volume for the period from the end of 2021 to the beginning of 2022 as demand from independent refiners weakened after China imposed restrictions on oil production from Iran. The blockade measure greatly affected the fuel margin and China increased imports of lower-priced Russian oil.

Oil prices received a boost last week after the European Commission proposed a phased embargo on Russian oil. However, the adoption of this embargo was delayed in the context of Eastern European members demanding exemptions and concessions.

According to sources familiar with the matter, the EC is drafting a new version of the embargo. It is likely that this version will lift the ban on European ships carrying Russian oil, after pressure from Greece, Cyprus and Malta.

Financial markets are also concerned that some European economies could suffer if oil imports from Russia are further reduced, or if Russia retaliates by cutting off gas supplies to the region.

German officials are quietly preparing for a scenario where Russia suddenly stops supplying gas, according to Reuters. An emergency package of measures could include an order to control key companies in the country.

Stopping Russian gas supplies to Germany will lead to a deep recession and the loss of half a million jobs in Europe’s top economy, senior economists say.

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