Oil Prices Fluctuate Amid Middle East Tensions
In a rollercoaster of a trading day, oil prices took a dip on Thursday after a two-session surge that saw a 3 percent increase. The tension in the Middle East is fueling concerns about supply risks, according to Reuters.
By 09:50 a.m. Saudi time, Brent crude futures were down 25 cents at $78.08 a barrel, while US West Texas Intermediate crude slipped 13 cents to $75.10. Both benchmarks had initially risen from near-2024 lows before reversing course.
The possibility of disruptions in Middle East supply chains has injected volatility into the market. Recent killings of senior members of Hamas and Hezbollah have heightened fears of retaliatory strikes by Iran against Israel.
Despite the tensions, supply has remained largely unaffected. However, attacks on ships in the Red Sea have forced tankers to take longer routes, adding to the uncertainty.
ANZ Research noted, “The market has been on edge as it awaits a response from Iran.”
Meanwhile, Libya’s National Oil Corp. is closely monitoring the situation as global oil prices continue to fluctuate. FORCE MAJEURE DECLARED IN SHARARA OILFIELD: PROTESTS LEAD TO REDUCED PRODUCTION
In a bold move, the company has officially declared force majeure in its Sharara oilfield starting Tuesday. This decision comes after the company gradually decreased production in response to ongoing protests. The Sharara oilfield, a key player in the oil industry, is now facing uncertainties and challenges due to these unforeseen circumstances.
US CRUDE INVENTORIES PLUMMET, SIGNALING STRONG DEMAND
In a surprising turn of events, crude inventories in the US, the largest oil consumer in the world, have fallen by 3.7 million barrels. This significant drop far exceeded analyst expectations of a mere 700,000-barrel draw. This marks the sixth consecutive weekly decline, bringing inventories to a six-month low. Despite concerns about weak economic activity, the demand for physical barrels remains surprisingly robust, according to analysts at ANZ.
CITI ANALYSTS PREDICT BOUNCE IN PRICES FOR BRENT
Amidst the fluctuating market conditions, analysts at Citi foresee a potential bounce in prices for Brent crude oil, with a projected range in the low-to-mid-$80s. The market continues to face upside risks, including tight balances through August, heightened geopolitical tensions in North Africa and the Middle East, potential weather-related disruptions during hurricane season, and light managed money positioning. Citi emphasizes the need for vigilance and strategic decision-making in navigating these volatile market conditions.