Production cuts lead to stronger oil prices despite weakness in China
Danish Patel
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Chinese imports fell by 2.38 mb/d in July from 12.67 mb/d in June, reaching the lowest monthly total in 2023. Refiners even had to dip into their crude reserves in July to meet demand, a first in 33 months.
As manufacturing is also facing headwinds elsewhere in the world, the increase in demand for oil has been largely driven by a surge in international travel so far for the year.
Faced with continued high economic uncertainty and rising interest rates threatening global growth, particularly in manufacturing and the Chinese economy, major OPEC+ members have announced further production and export cuts.
Prices of the main crude oil benchmarks rebounded over the summer and could continue to rise over the remainder of the year. Higher prices could stymie inflation-fighting efforts by central banks around the world.