Oil prices remained steady at the beginning of the new quarter, with Brent crude hovering around $72 per barrel, while West Texas Intermediate (WTI) stayed above $68. The market’s relative calm comes despite heightened geopolitical tensions following Israel’s targeted assassination of Hezbollah’s leader, which triggered retaliatory strikes. Israel has since ramped up its military actions, launching targeted raids against Hezbollah positions in southern Lebanon. However, the conflict has so far had limited impact on oil production in the region, with no significant disruptions reported.
The third quarter of 2024 was particularly tough for oil markets, with Brent crude suffering a substantial 17% decline. The drop was fueled by concerns over global economic weakness, especially in China, which has been grappling with a sluggish economy despite unveiling large-scale stimulus packages. China’s slowdown continues to be a key factor weighing on demand projections for oil, causing prices to remain soft.
Adding to the market’s uncertainties, Libya is reportedly preparing to ramp up oil production after its rival factions reached a compromise, potentially increasing global supply. If Libya restores production, this could further press oil prices downward, contributing to the overall bearish outlook.
Moreover, expectations surrounding OPEC+ have been a focal point for market participants. The alliance is set to hold an online monitoring meeting this week, during which it is expected to reaffirm its plans to gradually restore oil production starting in December. Russian Deputy Prime Minister Alexander Novak recently indicated that OPEC+ has no immediate plans to alter its course, emphasizing the group’s commitment to its existing strategy.
Despite the geopolitical risks in the Middle East, oil prices have remained relatively immune to the conflict, as the region’s crude output has remained largely unaffected. However, market sentiment remains cautious as traders keep a close eye on developments, particularly with Israel’s escalated military actions and their potential to spread instability across the region. This, combined with global economic challenges, is likely to keep oil prices under pressure in the short term.
