Oil prices adjusted downward on Monday as the Organisation of Petroleum Exporting Countries and allies (OPEC+) commence the implementation of a 400,000 barrels per day (bpd) output raise in August 2021.
This is in addition to growing concerns over a slowdown in global demand due to the rapid spread of the delta variant of COVID-19, worries about China’s oil demand and geopolitical tensions in the Middle East.
Investors are concerned about the surge of Covid-19 infections globally, which could affect mobility as some nations may impose travel restrictions.
Data published by Chinese authorities showed a decline in the growth in factory activity in July, which raised concerns over oil demand from China.
The Asian country’s purchasing manager’s index declined to 50.4 in July compared with 50.9 in June, the lowest figure since February 2020 when the index slipped to 35.7 after China began lockdown, Reuters reported.
Investors also are concerned about the growing tension following a drone attack on Thursday on an oil tanker owned by an Israeli billionaire in the Arabian Sea that killed two people on board.
The US, Israel and Britain all accused Iran of carrying the attack.
International benchmark Brent crude traded at $74.54 a barrel, sheds 1.15% after closing Friday at $75.41 a barrel.
American benchmark West Texas Intermediate (WTI) was trading at $73.19 a barrel at the same time with a 1.03% decrease after ending the previous session at $73.95 per barrel.
The negative economic data from China, the world’s second-largest oil consumer, stoked demand concerns as the country is battling a new COVID-19 outbreak.
Meanwhile, oil supply from the Organisation of Petroleum Exporting Countries and its allies (OPEC+) has increased from the beginning of August in line with the group’s decision in July.
The group had agreed to raise output by 400,000 barrels per day from August to December and extended its production cut agreement from April 2022 to December 2022.