Oil prices post weekly decline amid war and supply concerns

Live updates: Follow the latest on Israel-Gaza Oil prices jumped as much as 2.5 per cent on Friday before paring gains at the close of trading after reports Iran was planning a retaliatory strike on Israel in the coming days, leading to supply concerns . Brent , the benchmark for two thirds of the world's oil, settled 0.4 per cent higher at $73.10 a barrel. West Texas Intermediate, the gauge that tracks US crude, added 0.33 per cent to $69.49 a barrel. Crude prices were able to recover from a 6 per cent fall on Monday, but still posted a weekly decline. Brent and WTI are down 5.11 per cent and 3 per cent, respectively, so far in 2024, and have slid more than 16 per cent since the Israel-Gaza war broke out on October 7 last year. "Taking off the risk premium, the fundamentals still look fairly weak for oil in the coming months," Daniel Richards, a senior Middle East and North Africa economist at Dubai's Emirates NBD, said on Friday. The conflict between Israel and Iran is continuing to simmer, with Tehran set to attack Israel from Iraqi territory in the coming days, Axios quoted Israeli intelligence sources as saying on Thursday. Iran is also recruiting terrorist cells inside Israel to conduct retaliatory attacks, security officials told The National this week . The two countries traded threats at the UN Security Council on Monday, with Iranian ambassador Amir Saeid Iravani condemning the strikes on Tehran at the weekend. He said Iran had the “inherent right” to respond to Israeli attacks, while Israel warned of “swift and decisive” consequences for any retaliation. Israel carried out the attack in response to a barrage of ballistic missiles fired by Iran this month. Iran said the October 1 attack on Israel was in response to the assassinations of Hezbollah leader Hassan Nasrallah in Beirut, Hamas political leader Ismail Haniyeh in Tehran and Islamic Revolutionary Guard Corps commander Abbas Nilforoushan . Opec member Iran produces more than three million barrels of oil a day. But "geopolitical tensions have proved to be a temporary boost to oil bulls", said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "The global economic outlook and supply / demand dynamics remain comfortably bearish for oil." Concerns about a dip in demand, mainly in China, have weighed on the market. Oil consumption in China, the world's second-biggest consumer of crude, has slowed in recent months, which analysts attribute to a slowing economy and a long-term shift towards the use of electric vehicles. There are signs, however, that the world's second-largest economy is steadying, as the country's manufacturing sector posted its first expansion in six months, suggesting that Beijing's aggressive stimulus measures – aimed at addressing slowing manufacturing, a property market downturn and rising unemployment – are having a positive effect. China's biggest economic stimulus initiative since the Covid-19 pandemic included lowering interest rates, reducing mortgage rates for existing homeowners and a major cash injection into the economy. Meanwhile, the World Bank expects the global oil supply to exceed demand by an average of 1.2 million barrels per day next year, it said in its latest Commodity Markets Outlook this week . Partly accounting for the large oil supply is a “major shift” in China, where the World Bank said demand for the commodity has “essentially flatlined” since last year due to lower industrial production and a shift to electric vehicles. In addition, several countries that are not part of Opec or Opec+ are expected to increase oil production, the World Bank said. The price of Brent crude oil is expected to average $80 per barrel this year, before falling to $73 and $72 per barrel in 2025 and 2026, respectively, it said. In the US, petrol stockpiles posted a surprise decline last week to hit a two-year low on accelerating demand, while crude inventories also registered an unexpected drop as imports waned, the Energy Information Administration reported on Wednesday.

Oil prices post weekly decline amid war and supply concerns

Fundamentals for crude 'still look fairly weak' in the coming months, economist says