Brent Crude and WTI Crude Suffer Losses
Brent crude dropped $2.41, or 3.04%, to $76.90 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $2.49, or 3.29%, to $73.17. Despite OPEC oil output decreasing in April, the market has not responded positively due to ongoing sanctions on Russia and Iran.
Iran's Oil Production Surpasses 3 Million Barrels
On Tuesday, Iran's oil minister reported that the country's oil production had exceeded 3 million barrels per day. Under U.S. sanctions since 2018, Iran had an average daily production of 2.4 million barrels in 2021.
China's Manufacturing Activity Declines
Manufacturing activity in China, the world's largest crude importer, fell unexpectedly in April, marking the first contraction in the manufacturing purchasing managers' index since December. This decline may not be short-lived, pointing to weakening export markets, reduced imports, and falling wages.
Global Economic Outlook Impacts Oil Prices
A murky economic outlook in other parts has also put pressure on oil prices. Analysts cite unpredictable central bank actions, consuming and producing nations' rhetoric and actions, and other factors that cast doubt on prospects.
Central Banks' Interest Rate Hikes Impact on Energy Demand
Investors anticipate interest rate hikes by inflation-fighting central banks, which could slow economic growth and decrease energy demand. The U.S. Federal Reserve is expected to raise interest rates by 25 basis points on Wednesday, and the ECB is predicted to follow suit on Thursday.
U.S. Crude Oil Stockpiles Offer Limited Support
A poll on Monday revealed that U.S. crude oil stockpiles are expected to have decreased for a third consecutive week, offering some support to oil prices. This poll was conducted before reports from the American Petroleum Institute were scheduled for release on Tuesday.