Oil prices fell on Tuesday as the market awaited confirmation on whether Iraqi exports through the Turkish port of Ceyhan would resume, potentially easing supply shortages caused by OPEC+ cuts, while the struggling Chinese economy continues to cast a shadow over global demand forecasts. As of 02:41 GMT, Brent crude dropped eight cents to $84.38 a barrel, and West Texas Intermediate (WTI) fell seven cents to $80.65 a barrel.
An official in the office of Iraqi Oil Minister Hayyan Abdul-Ghani told Reuters on Monday that the minister arrived in Ankara, Turkey, to discuss various issues including the resumption of oil exports through the Ceyhan port. Turkey halted Iraq's exports of 450,000 barrels per day via a pipeline from northern Iraq to Turkey on March 25 after a ruling in an arbitration case by the International Chamber of Commerce.
Increased Iraqi crude oil entering the market could alleviate the supply crisis of high-sulfur crude caused by the OPEC+ alliance, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, extending and expanding production cuts.
Meanwhile, pessimism regarding the economic outlook in China, the world's second-largest oil consumer, has pressured prices and heightened concerns about fuel demand. Eurasia Group mentioned in a note that "China's economic weakness is weighing on oil prices and will cap them this year, especially as Beijing appears committed to avoiding large-scale fiscal stimulus."
An initial Reuters survey indicated that U.S. crude oil and gasoline inventories likely declined last week, which helped curb the drop in oil prices. The American Petroleum Institute is set to release inventory data later on Tuesday, while the Energy Information Administration, the statistical arm of the U.S. Department of Energy, will publish its figures on Wednesday.
Additionally, a note from ANZ Research stated that the market is also focused on preliminary data for the U.S. Purchasing Managers' Index (PMI) for August and the annual economic symposium of the Federal Reserve in Jackson Hole, scheduled for later this week. Economic data from the U.S. in recent weeks has supported expectations that the central bank will keep interest rates elevated for a longer period, which weakens the outlook for oil demand and a wide range of consumer goods.
