Crude Oil Prices Decline as Middle East Tensions Ease
Crude oil prices have softened as geopolitical pressures in the Middle East ease, ahead of the Organisation of Petroleum Exporting Countries and Allies (OPEC+) meeting. Brent crude fell to $71.92 per barrel, while the US benchmark, West Texas Intermediate (WTI), slid to $68.26 per barrel on Thursday.
Middle East Ceasefire Eases Supply Concerns
The recent ceasefire agreement in the Middle East has alleviated fears of supply disruptions, contributing to the drop in crude prices. Analysts expect further stability in global oil markets, with OPEC+ anticipated to delay production increases amid the changing geopolitical landscape.
“The anticipation of a lasting ceasefire in a region housing significant oil reserves has eased concerns, shifting market dynamics,” an industry analyst noted.
Stronger Dollar Adds Downward Pressure
Adding to the bearish sentiment is a stronger US dollar, which makes crude oil more expensive for international buyers using other currencies. The US dollar index rose by 0.25% to 106.34, amplifying the impact on oil demand.
Meanwhile, concerns over US President-elect Donald Trump’s plans to increase tariffs have sparked fears of disruptions to the Federal Reserve’s efforts to control inflation.
Market Supply Dynamics
Despite the price drop, the US Energy Information Administration (EIA) reported a larger-than-expected decline in crude oil inventories, which fell by 1.8 million barrels last week. This drawdown was attributed to a decrease in imports, which fell by 1.6 million barrels per day to 6.1 million barrels per day.
Conversely, exports increased by 0.3 million barrels per day to 4.7 million barrels per day, indicating strong international demand. Refinery utilization rates in the US also rose slightly to 90.5%, reflecting higher output levels.
Gasoline inventories grew by 3.3 million barrels to 212.2 million barrels, while distillate stocks increased by 0.4 million barrels to 114.8 million barrels. However, natural gas demand remains sluggish, with inventories dropping by just 2 billion cubic feet (Bcf) last week, compared to a seasonal average draw of 30 Bcf.
Outlook on OPEC+ Meeting
As markets await the upcoming OPEC+ meeting, industry watchers predict the group will factor in the recent easing of Middle East tensions while deciding on production targets.
“Crude oil markets are expected to find balance over the coming months as OPEC+ adopts a cautious approach,” noted an energy market strategist.
While the global market remains volatile, the combination of geopolitical stability, currency fluctuations, and supply adjustments is expected to shape oil price trends in the short term. IFC Invests s605m to Boost Egypt’s Green Economy, SMEs
