Oil prices retained their gains on Monday as political uncertainty in the United States and the Middle East supported prices, offsetting selling pressures caused by weak demand in China, the world’s largest crude importer. The strong dollar also affected oil prices, as a stronger dollar tends to lower oil prices since buyers using other currencies have to pay more for dollar-denominated crude.
The uncertainty surrounding the volatile situation has kept the geopolitical value of oil high. Oil markets also receive broad support from supply cuts by OPEC+, with Iraq’s oil ministry stating it will compensate for any excess production since the beginning of 2024. Additionally, strong summer consumption in the United States supports oil prices.
On another note, China’s crude oil imports fell by 2.3% in the first half of this year to 11.05 million barrels per day, amid disappointing fuel demand and independent refineries cutting production due to weak profit margins. Customs data on Monday showed that crude production at Chinese refineries fell by 3.7% in June compared to the previous year to 14.19 million barrels per day, the lowest level so far this year.
Energy services company Baker Hughes said on Friday that the number of active oil rigs in the United States, an early indicator of future production, fell by one rig to 478 last week, the lowest level since December 2021.
