World oil prices opened lower in a trading on Tuesday (03/January). This commodity was pressured by market concerns about the demand outlook. 

At the time when this news was written, Brent oil prices were down by 0.52 percent at $85.50 a barrel. Meanwhile, the WTI oil was down by 0.63% at $79.91 a barrel.

After the Chinese government announced that they would gradually relax COVID restrictions, there was an alarming surge in positive cases in the region. This inevitably dampened optimism about oil demand from China. 

In fact, oil prices had soared quite high at the end of 2022. The cause is the market was optimistic that the easing of China's policy would increase oil demand.

Global Risk Sentiment Slumped 

In addition, global risk sentiment slumped as a result of the latest statement from the Managing Director of the IMF, Kristalina Georgieva. He warned that a third of the world's countries could potentially be hit by recessionary storms this year. 

Georgieva also said that a recession is looming over major countries such as the United States and China. So, the world will face tougher challenges in 2023. 

The same thing was also conveyed by President Xi Jinping. Thoughtfully, he said that China will face many challenges after deciding to shift towards a new phase (easing restrictions) in the face of COVID. 

Some analysts expect the economy of that country to experience a worse slowdown than last year. It is especially if the Xi administration fails to control the COVID surge due to policy easing.

China’s Economy Has Grown by 4.4 Percent

China's economy itself has recorded growth of 4.4 percent last year. This figure is indeed higher than market expectations, but it has dropped drastically when compared to economic growth in 2021. 

Apart from that economic conditions and global risk sentiment, oil prices in the future will also be affected by the US Dollar and the Fed's policy regarding interest rates.

Before, the world oil prices opened higher in trading on Wednesday (28/December) amid an outbreak of market optimism on the prospect of oil demand from China and tightening US oil supplies. 

At that moment, the Brent Oil was up by 0.14% at $84.91 a barrel. Meanwhile, the United crude was up by 0.17% at $79.65 a barrel.

News from China is Always Essential 

News from China became one of the main catalysts in the increase in oil prices. The reason is that the planned easing of COVID policies will revive their economy and provide a breath of fresh air.

That is especially for the prospect of oil demand. Some analysts predict that this country’s move this time will lead to a complete lifting of restrictions in 2023. 

At the same time, U.S. crude oil production has been disrupted due to extreme cold weather. Storms originating in the Arctic region have sent cold winds to Canada and the America. 

This was sending air temperatures in both countries down well below zero degrees. That moment causes a position where certain il refinery operations in North Dakota and Texas ceased their works. 

Extreme Cold Weather will still Continue 

According to a number of experts, extreme cold weather is expected to last until January. The disruption of cold weather inevitably has a direct impact on America's crude oil supplies.

Based on the consensus of Reuters economists, the Americsn crude stockpiles are expected to 1.6 million barrels lowet than before. Meanwhile, Vladimir Putin decided to stop selling oil to some countries.

It is especially to those which were supporting the G7 policy that previously placed price limits on Russian oil. Kremlin spokesman saos in a momen that Russia will halt oil sales on February. Russia's move has the potential to tighten world crude supplies and support the strengthening of the prices of this commodity.