Chart of the Week: Weak Chinese demand pushes down price of crude oil

The price of North Sea Brent Crude oil has fallen this month, down 8% from a peak on 5 July. The main driver of the price decrease was weak global demand, in particular from China, the world’s largest importer, representing 15% of the IEA’s forecast of global crude oil production in 2023. China’s imports of crude oil (by volume) were down 9% in May and 11% in June compared to the year before. Additionally, Chinese refiners are cutting back production amidst weak economic growth and a housing crisis that has decreased demand for oil used in construction. The country’s total demand for , a product from refining crude oil, was down 11% in the first half of 2024 from the year before, according to China’s official data.[1] Furthermore, weak global demand and over-supply of oil further decreased oil prices and caused on-land inventory stocks to rise to a 30-month high, according to the IEA. The falling oil price and weak demand might impact the decision by on whether to increase supply next quarter. OPEC+ has cut production in 2023 and 2024. Weak demand reduces the likelihood of a supply increase from the oil-producing nations, who benefit from a higher oil price.

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[1] It is worth noting that imports in 2023 were at a record-high due to discounted oil from Russia.

The views expressed in this article are the views of the author, not necessarily those of LSEG.