Oil futures reversed course after briefly rising on Monday due to ongoing uncertainty around OPEC+ supply cuts and uncertainty about global fuel demand growth. The risk of supply disruptions from the regenerated Middle East conflict limited losses.
Brent crude futures were down 0.6%, or 49 cents, at $78.39 a barrel by 04:06 GMT, while West Texas Intermediate (WTI) crude futures were down 0.6%, or 42 cents, at $73.65 a barrel.
Crude oil appears to be under constant pressure due to the OPEC+ decision. It is possible to ignore OPEC+’s deeper cuts to some extent, but it is not right to rule them out completely.
Oil prices fell more than 2% last week as investors doubted the depth of supply cuts by the Organization of the Petroleum Exporting Countries and its so-called OPEC+ allies, including Russia, and concerns about sluggish global production activity.
The fact that the cuts announced by OPEC+ on Thursday were voluntary raised doubts about whether producers will fully implement these cuts. Investors believe it is unclear how the cuts will be measured.
As conflicts begin again in Gaza, geopolitical issues also preoccupy investors’ minds. The US military claimed in a statement on Sunday that the Houthi group in Yemen carried out drone and missile attacks on two Israeli ships in the region. It was said that three commercial ships were also attacked in international waters south of the Red Sea.
The resumption of the Israel-Hamas war can be expected to increase the upward momentum in oil prices. However, oil prices may remain under pressure for now due to China’s weak economic recovery and rising US production.
U.S. oil rigs rose by 5 this week to 505, the highest level since September, energy services company Baker Hughes said in a report on Friday.
Regarding Russian oil, western countries have stepped up efforts to impose a $60 per barrel price ceiling on sea shipments of Russian oil to punish Moscow for its war in Ukraine. Therefore, Washington imposed additional sanctions on three entities and three oil tankers on Friday.
Separately, the White House said Friday it intends to pause sanctions relief against OPEC member Venezuela in the coming days unless further progress is made on the release of Venezuelan political prisoners and detained Americans. Meanwhile, India resumed oil purchases from Venezuela.