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Oil prices fell as China’s briefing failed to deliver fresh fiscal stimulus, with Brent dropping below $78. Meanwhile, escalating Israel-Iran tensions threaten oil supply from the Middle East, contributing to a 9% rise in Brent share price this month.
Oil prices dipped after China’s Finance Ministry briefing on Saturday disappointed market expectations. Brent share price fell below $78 per barrel following a 0.5% decline on Friday, while West Texas Intermediate (WTI) traded near $74. Despite China’s government hinting at more support for its struggling property sector and potential increases in government borrowing, there was no major announcement of new fiscal stimulus to spur demand in the world’s largest oil importer.
Oil markets closely monitor China’s economic performance, as the country remains a dominant player in global oil consumption. The lack of fresh measures to boost demand has weakened market sentiment, particularly as China grapples with slowing growth. The absence of more robust policy support dampened hopes for a near-term recovery in Chinese demand for crude oil, adding pressure on prices.
In parallel, traders are keeping a close eye on rising geopolitical tensions between Israel and Iran, which pose a significant risk to the global oil supply. After Iran launched a ballistic missile attack on October 1, Israel has reportedly been narrowing down its potential retaliatory targets, with military and energy infrastructure in its sights. These developments have caused heightened uncertainty in the market, with analysts weighing the potential fallout from an escalation in the region.
Adding to the tension, a Hezbollah drone attack over the weekend resulted in the deaths of four Israeli soldiers. In response, the United States announced plans to send advanced missile defence systems to support Israel. The Middle East remains a key supplier of oil, providing around one-third of the world’s crude, and any significant disruption could lead to further supply constraints.
Brent has risen by approximately 9% in October due to mounting fears of a potential conflict between Israel and Iran, leading hedge funds to unwind bearish positions against crude at an accelerated pace. However, the broader economic outlook, particularly in China, remains a crucial factor in determining the future direction of oil prices.
With the Brent share price under pressure, the market continues to weigh the impact of geopolitical risks and sluggish demand from key importers like China.
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