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Oil Prices Decline and futures underwent a directional shift. Retracting briefly on Monday amidst persistent challenges from the OPEC+ decision and uncertainties surrounding global fuel demand growth. Despite a transient uptick fueled by the potential for supply disruptions arising from the Middle East conflict. These gains were curtailed.
At 0735 GMT, Brent crude futures saw a 0.9% decline, equivalent to 73 cents, settling at $78.15 per barrel. Concurrently, U.S. West Texas Intermediate crude futures experienced an 0.8% drop, or 64 cents, reaching $73.43 per barrel.
Oil Prices Decline: Vanda Insights Founder Notes Market Disregard for OPEC+ Cuts
Vandana Hari, the founder of Vanda Insights, a provider of oil market analysis, observed. “Crude seems to consistently swayed by the OPEC+ decision… Some level of discounting of the more extensive OPEC+ cuts is justifiable, but at present, the crude complex has largely disregarded them.”
The preceding week witnessed a reduction of over 2% in oil prices due to investor skepticism regarding the depth of the supply cuts announced by OPEC+ (Organization of the Petroleum Exporting Countries and its allies, including Russia). Concerns about sluggish global manufacturing activity further contributed to this decline.
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The voluntary nature of the declared OPEC+ cuts raised doubts about complete implementation by producers. With uncertainty prevailing over the measurement of these cuts.
Geopolitical Unrest in Gaza Boosts Oil Prices
Furthermore as Oil Prices Decline, geopolitical considerations took center stage as conflicts resumed in Gaza. Leading to attacks on three commercial vessels in international waters in the southern Red Sea. This, coupled with the resumption of the Israel-Hamas war, contributed to a bullish momentum in oil prices, as noted by Tina Teng, an analyst at CMC Markets.
Despite these geopolitical factors, oil prices may encounter sustained pressure due to China’s sluggish economic recovery and the uptick in U.S. production, cautioned Teng.
Oil Prices Decline: Limits on Russian Oil and White House’s Stance on Venezuela Sanctions
Meanwhile, western countries escalated efforts to enforce a $60 per barrel price cap on seaborne shipments of Russian oil, aiming to penalize Moscow for its involvement in the Ukraine conflict. The U.S. imposed additional sanctions on three entities and three oil tankers in this regard.
In a separate development, the White House expressed readiness on Friday to “pause” sanctions relief for OPEC member Venezuela unless progress is made on the release of Venezuelan political prisoners and “wrongfully detained” Americans. Simultaneously, India resumed its purchases of Venezuelan oil.
