Oil Prices Continue To Slump; WTI Crude At $88.81/bbl On China-Taiwan Crisis

Oil prices declined further below key levels on Friday (August 5, 2022) and were on course for large weekly losses on the back of escalating China-Taiwan crisis as well as Bank of England's rate hike that dimmed the demand outlook for the commodity.

As of writing this copy, Crude oil WTI futures traded at $88.83 per bbl, while brent oil futures traded with marginal gains of 0.25% at $94.35 per bbl. In the previous session, both the crude oil benchmarks shed over 3$. On a weekly basis, the loss in the commodity has mounted in the range of 12-17%.

The sharp fall in crude prices in the previous session was triggered after China fired missiles around Taiwan, aggravating hostile situation led by Nancy Pelosi's ( U.S. House of Representatives Speaker Nancy) Taipei visit.

The development will worsen sentiment in relation to Asia's largest economies and shall also impact other asset prices in the region.

Furthermore, the Bank of England hiked interest rate and suggested more steps to fight inflationary pressure, signalling that the UK is set to face economic commotion in the near term.

Largely, the losses in oil prices this week were fuelled by weak manufacturing data that led to concerns of weakening demand for the commodity. An unexpected jump in weekly US crude stockpiles also suggested of a potential glut that also to an extent is weighing on the crude oil prices.

Worth mentioning that amid this set-up, the Organization of Petroleum Exporting Countries and allies (OPEC+) released its smallest ever supply hike which is suggestive of a grim demand outlook for the commodity.