LONDON: Oil prices have dropped by a quarter since June and could fall further if a nuclear deal is reached with Iran as it would bring more crude to the market, yet inflation remains stubbornly high.

Crude prices soared to $140 per barrel in early March after Moscow invaded Ukraine, raising fears that Western sanctions would drastically cut supplies from Russia, a major producer and exporter.

But traders are now concerned about demand due to various factors, including fears of recession, a strong dollar and weak Chinese oil imports during the country’s Covid lockdowns, said Giov­a­nni Staunovo, commodities analyst at UBS bank.

Oil prices are set in dollars, so any rise in the currency makes barrels more expensive for importers using other currencies.

In China, “oil demand has taken a hit as processing of crude imports were weak in July” although stockpiles still rose, said Geordie Wilkes, analyst at Sucden.

The price of Brent, the international benchmark, has dropped to $95 while WTI, the main US contract, is at around $90 — and fuel prices at the pump have fallen in the United States.

But UBS expects Brent prices to climb back to around $125 by the end of the year as Russia exports fall, Chinese imports rise and Western countries stop tapping their strategic reser­ves, Staunovo said.

Published in Dawn, August 19th, 2022

Opinion

Editorial

Ties with Tehran
Updated 24 Apr, 2024

Ties with Tehran

Tomorrow, if ties between Washington and Beijing nosedive, and the US asks Pakistan to reconsider CPEC, will we comply?
Working together
24 Apr, 2024

Working together

PAKISTAN’S democracy seems adrift, and no one understands this better than our politicians. The system has gone...
Farmers’ anxiety
24 Apr, 2024

Farmers’ anxiety

WHEAT prices in Punjab have plummeted far below the minimum support price owing to a bumper harvest, reckless...
By-election trends
Updated 23 Apr, 2024

By-election trends

Unless the culture of violence and rigging is rooted out, the credibility of the electoral process in Pakistan will continue to remain under a cloud.
Privatising PIA
23 Apr, 2024

Privatising PIA

FINANCE Minister Muhammad Aurangzeb’s reaffirmation that the process of disinvestment of the loss-making national...
Suffering in captivity
23 Apr, 2024

Suffering in captivity

YET another animal — a lioness — is critically ill at the Karachi Zoo. The feline, emaciated and barely able to...