Brent oil is preparing to close this week with a decline due to the economic difficulties in China. OPEC+ members’ cuts in production have caused oil prices to rise repeatedly over the past six weeks.
During the six-week series, the price of brent oil rose 15% to over $86. However, the precious commodity seems to close the week in red this time. Brent has lost nearly 3% since Monday to $83.3.
Brent oil chart.From a technical point of view, we can say that the price is stuck at the resistance level around $86.
Why is China Important?
China, the world’s second largest economy, is the largest oil importer due to its high industrial production. Therefore, the economic difficulties in China put downward pressure on prices despite the shrinking supply. The Asian giant is facing problems such as slow recovery, stagnant real estate market and low production after the pandemic process.
When the tight monetary policy implemented around the world is added on top of these developments, the demand for Chinese products, especially by European and American citizens, decreases.
