U.S. job growth slowed more than expected in July, and unemployment rose to 4.3%, heightening fears of a possible recession.
Purchasing Managers’ Index (PMI) readings for July indicated a slowdown in activity across Asia, Europe, and the United States. The U.S. experienced an especially steep drop, with the PMI falling to 46.8, its lowest level in eight months, driven by a decline in new orders.
China’s manufacturing activity showed some improvement, but its July PMI still fell below 50, indicating a contraction. This contraction impacts oil prices due to China’s status as the world’s largest importer of the commodity.

Falling manufacturing activity in China also pressured prices, adding to concerns about demand growth. June data showed that imports and refinery activity were lower than a year earlier.
Asia’s crude imports in July fell to their lowest level in two years, weakened by weak demand in China and India, according to data from London Stock Exchange Group (LSEG) Oil Research.
Meanwhile, OPEC oil output rose in July, according to a Reuters survey. A rebound in Saudi Arabian supply and small increases elsewhere offset the impact of ongoing voluntary supply cuts by other members and the wider OPEC+ alliance.

The Organization of the Petroleum Exporting Countries (OPEC) pumped 26.70 million barrels per day (bpd) last month, an increase of 100,000 bpd from June, according to the survey based on shipping data and information from industry sources.

An OPEC+ meeting on Thursday left the group’s oil output policy unchanged, including a plan to begin unwinding one layer of production cuts starting in October.

After the assassination of a high-ranking Hezbollah commander in Beirut and the head of the Hamas political office in Tehran on Wednesday morning, tensions in the Middle East have entered a new phase.
The initial market reaction to the escalation in the Middle East reflects growing fears of a potential direct conflict between Israel and Iran. This geopolitical risk premium outweighed concerns about weaker-than-expected oil demand in China on Wednesday. However, analysts noted that there has been no material disruption of oil supplies from the region.
Crude oil inventories in the United States fell again this week, this time by 4.495 million barrels for the week ending July 26, according to the American Petroleum Institute (API). Analysts had predicted a smaller draw of 2.333 million barrels. This marks the fifth consecutive week of API-estimated inventory draws for crude oil, totaling a loss of 24 million barrels during that period.