Oil headed for a third straight monthly drop, the longest losing run in more than two years, on prospects for slower global growth as central banks jack up interest rates and China presses on with its Covid Zero strategy.
West Texas Intermediate, which traded near $92 a barrel after tumbling on Tuesday, has shed almost 7% in August, hitting the lowest level since January mid-month. In the US, the Federal Reserve has been raising rates aggressively to quell inflation, while Europe is gripped by an energy crisis that may herald a recession. In Asia, growth in China, the top oil importer, has slowed.
Traders are also tracking an array of supply-related issues. While there has been significant unrest in both Libya and Iraq in recent days, oil output in both OPEC members appears to be unaffected so far. Separately, talks to revive an Iranian nuclear deal that may unlock greater crude exports have dragged on.
Oil’s decline in August marks the latest chapter in what’s been a tumultuous year, with prices driven higher in the first half by Russia’s invasion of Ukraine, then undermined as central banks shifted tack and Moscow managed to keep most exports flowing. Crude’s recent slump prompted OPEC+ heavyweight Saudi Arabia to raise the possibility the alliance could cut output, although Russian media reported the grouping wasn’t discussing such a move at present.
