Oil Prices Fall Further Due to China-Taiwan Tensions and Growth Concerns

As China-Taiwan tensions rose and the Bank of England hiked interest rates, a grim view for crude demand emerged, culminating in a further decrease in oil prices on Friday and a prediction of significant weekly losses.

As of 11:11 EST (00:11 GMT), Crude Oil WTI Futures traded down 0.3% to $88.30 per barrel, its lowest level since early February, before Russia's invasion of Ukraine.

Brent oil prices rose by 0.5% to $93.81 per barrel. Both indices fell more than 3 percent on Thursday and were projected to fall between 12 and 17 percent for the week.

China launched missiles around Taiwan on Thursday, escalating tensions prompted by the presence of Nancy Pelosi, the speaker of the United States House of Representatives, in Taiwan.

It is anticipated that the move will have a negative impact on the value of other assets in the region, as well as on perceptions of Asia's major economies.

In addition, the Bank of England increased interest rates and proposed more anti-inflation measures, indicating that the United Kingdom may soon experience economic turbulence.

As most economies struggle with increasing inflation, the (rapid) tightening of monetary policy in the developed world is fanning worries of an oncoming recession.

The decrease in oil prices this week was caused by a cascade of bad industrial indicators, which raised worries of a demand slowdown.

The surprise weekly increase in crude oil stocks in the United States signaled a probable supply surplus in the world's largest oil consumer.

In this environment, the Organization of Petroleum Exporting Countries and its allies (OPEC+) announced the weakest production rise in their history, indicating a grim demand outlook.

Despite a drop in global demand, a rising energy crisis in Europe would sustain oil prices. As a response to Russia's invasion of Ukraine, the bloc is aiming to reduce its dependence on Russian oil and gas.

The fall in oil prices offers import-reliant economies some relief from the inflation induced by growing fuel expenses.

Focus is now on the U.S. nonfarm payrolls data, which will provide more insight into the largest economy in the world.