Oil prices experienced a slight uptick yesterday, driven by concerns over potential disruptions in Middle Eastern supplies due to heightened tensions.
However, gains were tempered by uncertainty surrounding the pace of interest rate cuts by central banks and their potential impact on fuel demand. Brent crude futures edged up by 30 cents to reach $82.30 a barrel, while US West Texas Intermediate crude rose by 31 cents to $77.23 a barrel. Despite stability in Monday’s trading, oil prices had surged by 6 percent the previous week. Yet, prospects of US interest rate adjustments acted as a limiting factor on oil price increases, reports Al-Jarida daily.
Amidst these developments, the Federal Reserve Bank of New York’s survey revealed that consumer expectations for inflation remained unchanged for both the short and long term, hovering above the Federal Reserve’s target rate of 2 percent. Concerns linger that if inflation worries delay anticipated interest rate cuts by the US Federal Reserve, it could dampen oil demand by slowing economic growth.
Haitham Al-Ghais, Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC), sought to allay concerns regarding Saudi Arabia’s decision to defer plans to expand production capacity. Al-Ghais clarified that this decision shouldn’t be interpreted as a sign of declining crude demand, emphasizing OPEC’s confidence in its forecasts. OPEC is slated to release its 2024 forecasts later this year, with Al-Ghais asserting the organization’s belief in the accuracy and strength of these projections.
Highlighting the evolving landscape of global emissions goals, Al-Ghais noted that many countries are reevaluating their strategies, potentially leading to increased long-term demand for oil. He underscored the flexibility of OPEC’s approach, particularly regarding voluntary production cuts, which he described as sovereign decisions by member countries to adjust output as needed. Al-Ghais emphasized OPEC’s commitment to stabilizing the market, noting the organization’s array of strategies to achieve this objective.
