Players assess Middle East supply concerns, oil remains steady

Money Bizwiz Team
2 Min Read

As the week comes to a close, oil prices are holding steady in early trading on Friday, reflecting a delicate balance between supply concerns in the Middle East and signs of weakened demand. Investors are closely monitoring the ongoing situation to determine the future direction of the market.

Currently, futures for October delivery are set to expire today and are holding steady at 0033 GMT. The November contract, which is more actively traded, saw a slight dip of 0.09% to $78.75. U.S. West Texas Intermediate crude futures also declined by 0.14% to $75.80.

Thursday saw both contracts settle higher by over $1, driven by supply concerns, particularly in Libya. More than half of Libya’s oil production, roughly 700,000 barrels per day, was offline as exports were halted at several ports due to political tensions. Consultancy firm, Rapidan Energy Group, anticipates production losses could reach as high as 1 million barrels per day for several weeks.

In addition to Libya, Iraq is also expected to see a reduction in supplies as the country plans to decrease its output to comply with OPEC+ quotas. Despite these supply disruptions, oil prices are heading towards a second consecutive month of decline.

The market received a small shock on Wednesday when data revealed a smaller than expected stock draw, causing a 1% dip in oil prices. Analysts are expressing concerns about the medium-term outlook for oil balances in the years to come.

Looking ahead, analysts at ANZ believe that OPEC may need to delay the phase-out of voluntary production cuts in order to boost prices. OPEC+ is set to gradually reduce voluntary production cuts of 2.2 million barrels per day over the next year, but with uncertainties looming, the organization may need to reassess its strategy.

© Reuters. A pumpjack operates at the Vermilion Energy site in Trigueres, France, June 14, 2024. REUTERS/Benoit Tessier/ File Photo

Stay tuned as the oil market continues to navigate through a dynamic landscape of supply disruptions and demand fluctuations, shaping the future of energy prices for all stakeholders involved.

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