Oil prices are decreasing, particularly due to the uncertainty arising from US-Iran negotiations. On Monday, May 19, oil prices fell amid a downgrade of the US credit rating by Moody’s, as well as a slowdown in industrial production and retail sales in China.
This is reported by Finway
According to Reuters, Brent crude futures dropped by 51 cents, reaching $64.90 per barrel, while US West Texas Intermediate crude fell by 48 cents, costing $62.04 per barrel. It is worth noting that last week the price of “black gold” was rising, as the US and China reached an agreement for a 90-day pause in the trade war, accompanied by significant reductions in import tariffs.
Impact of Credit Rating Downgrade on the Oil Market
Priyanka Sachdeva, a senior market analyst at Phillip Nova, notes that the downgrade of the US credit rating undermines confidence in the outlook for the American economy. Although Moody’s downgrade will not directly affect oil demand, it shapes pessimistic sentiments in the market. On May 16, Moody’s downgraded the US sovereign credit rating due to the rising national debt to $36 trillion, which could complicate President Donald Trump’s tax reduction policies.
Situation in China and Possible Consequences
According to official data, industrial production in China slowed down in April; however, the figures exceeded economists’ forecasts. At the same time, although Beijing and Washington reached an agreement to eliminate most tariffs on goods, the short-term truce and Trump’s unpredictable approach continue to raise concerns about the export of the Chinese economy. The uncertainty surrounding the outcomes of nuclear negotiations between Iran and the US also limits further declines in oil prices.