Oil slumps as Mideast supply disruption concerns ease; China data weighs

SINGAPORE (ICIS)–Oil prices tumbled by more than $4/barrel on Monday morning as fears over potential supply disruptions in the Middle East eased, with sentiment weighed down by a sharp contraction in China’s September industrial profits.

• Israel airstrikes miss Iran’s oil facilities
• China Sept industrial profits contract 27% year on year
• China nine-month oil refining losses at CNY32 billion

Product (at 04:00 GMT)	Latest ($/barrel)	Previous ($/barrel)	Change ($/barrel)
Brent December	72.61	76.05	-3.44
WTI December	68.45	71.78	-3.33

Israel’s retaliatory strikes on Iran over the weekend did not hit Tehran’s oil and nuclear facilities.

“The more targeted response from Israel leaves the door open for de-escalation and clearly the price action in oil this morning suggests the market is of the same view,” Dutch bank ING said in a macro note on Monday.

“Clearly, if we do see some de-escalation, it would allow fundamentals once again to dictate price direction,” it said.

Iran, which is a member of oil cartel OPEC, has the world’s fourth largest proven oil reserves.

“And with a surplus market over 2025, this would mean that oil prices are likely to remain under pressure,” ING added.

CHINA DATA IN FOCUS
China’s September industrial profits fell by 27.1% year on year, while average earnings in the first nine months dropped by 3.5% year on year, according to the country’s National Bureau of Statistics (NBS).

Lower production, especially in the motor vehicles sector amid a sharp rise in new energy vehicles weighed on demand.

Car production in September fell by 8.1% year on year, while new energy vehicles rose by 48.5% year on year.

China, the world’s second-biggest economy, is also its largest crude importer.

Its crude oil imports in September reached 45.5 million tonnes, down by 0.6% year on year, according to China Customs data.

Crude processing capacity also fell by 5.4%, while capacity in the first nine months of 2024 fell by 1.6% year on year.

Meanwhile, the oil refining sector posted losses of yuan (CNY) 32 billion ($4.5 billion) in the first nine months of 2024.

The fall was attributed to insufficient market demand, a drop in industrial product prices and a significantly higher base since August, NBS statistician Yu Weining said in a statement on Monday.

Investors will be watching a highly anticipated meeting between China’s leaders on 4-8 November in Beijing for potential further stimulus policies to aid growth.

On 12 October, China’s finance minister Lan Fo’an had said that the central government might raise debt to arrest economic headwinds.

Focus article by Jonathan Yee

($1 = CNY7.13)

Thumbnail image: Iran’s capital city of Tehran on 26 October 2024. (By ABEDIN TAHERKENAREH/EPA-EFE/Shutterstock)