Crude oil prices decreased on Tuesday after the US has mitigated the effect of the sanctions imposed on Iran, allowing the world’s largest oil customers to continue buying from Tehran. Additional pressures on the downward trend comes also the fears that a slowdown in the global economy may curb growth in oil demand.
The futures on the US crude WTI crude oil with delivery in December fell by 0.38% to 62.86 USD per barrel. The Brent variety reported a decline of 0.67% to 72.68 USD per barrel.
According to analysts, the expectations of a slowdown in global economic growth in the coming months are getting worse. At the same time, the US excluded eight countries from the sanction against Iran, allowing them to continue buying Iranian oil in the next 180 days. These are China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey.
The sanctions were already reflected in the oil markets trade, and now the focus should be the prospects for global demand. There is already a slowdown in the economy and a weaker growth in demand for oil. The weakness of local currencies puts pressure on the growth of key economies in Asia, including India and Indonesia. The trade dispute between the US and China threatens the growth of the two largest economies in the world.
The oil supply is sufficient in quantity, despite sanctions against Iran, as the output of the three largest producers in the world is growing.
The oil production from Russia, the United States and Saudi Arabia has reached a total of 33 million barrels of oil per day. This is an increase of 10 million barrels since the beginning of the decade and means that the three countries together account for one third of the world’s oil consumption.
Meanwhile, gold remains stable at 1,232.60 USD per ounce, with the lack of a particular movement in precious metal quotes early in the week due to expected US midterm elections. If the results trigger volatility in the capital markets, it may be expected to increase gold.
The US dollar index, measuring the strength of US dollars against a basket of six major currencies, also remained stable at 96.36 points.