OPEC Attributes Oil Price Drop to Slowing Chinese Economy

In its monthly report, OPEC highlighted that one of the key reasons behind the stagnant oil prices is China’s economic slowdown. The price of benchmark crude oils in the international market has fallen by around 25% since April 5, reaching new lows by Wednesday, September 11.

On Wednesday, Brent crude from the North Sea, the reference for the European market, was trading at $70.61 per barrel—a 22.55% decline from its early April price of $91.17. Meanwhile, West Texas Intermediate (WTI), the U.S. benchmark, dropped from $86.91 per barrel in April to $67.31, also marking a 22.55% decline from its highest price of the year.

OPEC, representing the 12 most significant oil-producing nations, pointed out that China’s slower growth is a major contributor to the energy price slump. The Chinese economy grew by 4.7% in the second quarter, down from the 5.3% increase in the first quarter of 2024.

“Domestic consumption in China remains a concern, influenced by uncertainties in the housing sector and discretionary spending,” OPEC noted in its report.

In the United States, oil demand typically rises during the summer. However, with the official end of the summer season on September 2, demand has naturally begun to decline. In contrast, China’s economy is showing signs of significant deceleration, with reports indicating that oil imports have dropped for four consecutive months.

This combination of reduced demand in China and seasonal shifts in the U.S. is exerting downward pressure on global oil prices, creating an uncertain outlook for the energy market.