Oil is down about $3 to just over $133 after China said it will raise fuel prices by up to 18%. China’s seemingly insatiable demand for oil is now hoped to stall. The US oil demand has already shown declines, but a change in the demand trajectory for China could have large and long-lasting implications for oil. Enacting this hike before the Olympics, and in the face of high inflation, is a bold move–especially given its ability to threaten China’s economy.
Meanwhile, Iraq is close to signing oil service deals with several major Western oil companies in hopes to jump start its output. The agreements would be the first of their kind since the 2003 invasion begun.
American Gas Use Finally Dropping as Fuel Costs Near 1981 Levels (XOM, GM, F)
Offshore Oil Not a Fix: Decade Before New Drilling Helps Prices (XOM)
Surprising Victim of $4 Gas: The Guy Selling It To You (XOM)