the contraction of the Chinese economy and the possible relaxation on the Iranian nuclear power are driving prices down

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Oil prices continue to fall this Tuesday, August 16. The barrel of Brent from the North Sea for October delivery is below 95 dollars and the American barrel remains below the 89 dollar mark. Bad news from the Chinese economy and hopes for an Iranian nuclear deal are the main reasons.

Investors are keeping a very close eye on Iran’s nuclear talks, which are – it seems – in their final phase. If an agreement is reached, it should lead to the end of American sanctions, decided after the American withdrawal from the 2015 agreement, and consequently the return of Iranian oil to the world market.

Read also: Tehran demands new concessions from the United States

Iran – which has the world’s third largest reserves of black gold – could then increase its crude production by a million barrels a day in a few months and flood a market as demand weakens due to a contraction in demand. China, analysts say. Indeed, the Chinese economy, a major oil consumer, is showing signs of weakness. In July, retail sales and industrial production experienced an unexpected slowdown due to the zero covid policy led by Beijing and the real estate crisis.

Read also China’s economy falters in the wake of the fall of real estate giant Evergrande

After soaring at the start of the year with strong post-Covid demand and the start of the Russian invasion of Ukraine, barrel prices have lost more than 20% in two months. Good news for consumers who are suffering from rising energy prices. In addition, the fall in crude prices affects the Russian currency. The ruble weakened to 62 rubles per US dollar on Tuesday August 16th.

►Also read: Oil: OPEC+ barely increases production targets, despite pressure

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