Oil rates decline by 1 percent over efforts to address Libya oil field shutdown crisis
(MENAFN) Oil rates saw a 1 percent decline on Wednesday, driven by efforts to address the Libya oil field shutdown crisis and recession concerns in the US, despite ongoing tensions in the Red Sea that are limiting further price drops. The international benchmark brent crude fell to USD72.75 per barrel from USD73.50 in the previous session, while the US benchmark West Texas Intermediate (WTI) decreased to USD68.99 per barrel from USD69.78.
The drop in oil rates comes amidst growing optimism that the suspension of oil production in Libya might be resolved. The UN Support Mission in Libya (UNSMIL) reported that talks held in Tripoli on Monday yielded a "significant understanding" aimed at resolving the crisis surrounding the Central Bank of Libya. This agreement is expected to be reviewed and finalized soon, which has alleviated concerns about potential supply shortages and contributed to the lower prices.
Additionally, macroeconomic data from the US has added to the downward pressure on oil rates. The Institute of Supply Management's (ISM) Manufacturing Purchasing Managers Index (PMI) for August rose to 47.2 but fell short of market expectations, while S&P Global's manufacturing PMI came in at 47.9, also below estimates. The weaker-than-expected PMI data suggested ongoing contraction in the US manufacturing sector, leading to a drop in the US 10-year Treasury bond yield.
Despite the decline in oil rates, the ongoing conflicts in the Red Sea—an essential route for oil and fuel shipments—are keeping prices from falling further. These disputes heighten concerns about potential supply disruptions, contributing to the current volatility in oil markets.
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