Oil prices fell by about 1.5% on the back of inflation data from China and the lack of clear fiscal stimulus measures from Beijing, which raises concerns about demand from the world's largest oil importer.
China's consumer price index increased only 0.4% in September, below expectations, while producer prices fell 2.8% year-over-year, the sharpest decline in six months. Although Beijing pledged increased debt issuance and support for its property sector, no specific stimulus figure was announced, disappointing investors.
At the same time, the situation on the oil markets remains tense due to geopolitical risks. Traders are monitoring Israel's potential response to Iran’s October 1 missile attack. Reports suggest possible military or energy infrastructure targets, despite U.S. warnings to avoid strikes on Iran's energy sector. Over the weekend, a Hezbollah drone attack killed four Israeli soldiers, while the U.S. deployed additional missile defense systems to support Israel.
Brent has gained about 9% this month amid fears of Middle East supply disruptions. Additionally, U.S. sanctions on Iran’s illicit oil fleet and a slight increase in American oil and gas rigs signal tighter market conditions. However, weak global demand and BP’s recent $600 million profit decline due to poor refining margins reflect broader challenges for the industry.
Analysts expect oil prices to remain range-bound, as uncertainties around China’s recovery and Middle East tensions continue to weigh on market sentiment.