Oil prices fall as tensions in Middle East ease, Libya production increases
Date
8/20/2024 5:53:39 AM
(MENAFN) Oil prices experienced a decline on Tuesday after Israel accepted a proposal aimed at narrowing differences that have been obstructing a ceasefire in Gaza, alleviating concerns over potential supply disruptions in the Middle East. brent crude futures dropped by 67 cents, or 0.86 percent, settling at USD76.99 per barrel by 0600 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures for the front month, which are set to expire on Tuesday, decreased by 62 cents, or 0.8 percent, to USD73.75 per barrel. The more actively traded second-month WTI contract also fell by 63 cents, or 0.86 percent, reaching USD73.03. This follows a broader decline on Monday, where Brent crude saw a drop of approximately 2.5 percent, and WTI crude experienced a sharper fall of 3 percent.
The easing of supply concerns comes after U.S. Secretary of State Antony Blinken announced that Israeli Prime Minister Benjamin Netanyahu had agreed to a proposal from Washington aimed at resolving the obstacles to a ceasefire in Gaza. Blinken also urged Hamas to accept the proposal, which has contributed to the easing of geopolitical tensions that have been influencing oil markets. Further alleviating supply fears was the resumption of production at Libya's Sharara oil field, which increased output to around 85,000 barrels per day to support the Zawiya oil refinery, according to engineers at the field. This recovery follows Libya's National Oil Corporation declaring force majeure on exports from the Sharara field on August 7 due to a blockade by protesters, which had significantly reduced production from its usual 300,000 barrels per day.
In the United States, market expectations of a decline in crude inventories added to the downward pressure on prices. A preliminary poll conducted on Monday forecasted a 2.9 million barrel drop in U.S. crude inventories for the past week. On the demand side, China's ongoing economic struggles have also weighed heavily on oil prices. After a disappointing second quarter, the world’s second-largest economy continued to lose momentum in July, with new home prices falling at the fastest rate in nine years, alongside slowing industrial production, declining export and investment growth, and rising unemployment. These factors collectively contributed to the dip in oil prices as global demand concerns persist.
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