2023-12-04T04:46:16+00:00
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Oil futures rose slightly at the beginning of trading on Monday, with the re-emergence of geopolitical tension in the Middle East, raising concerns about supplies from the region, but uncertainty regarding the voluntary reduction in production by OPEC+ and the growth of global demand for fuel casts a shadow. On the future outlook of the sector.
By 0018 GMT, Brent crude futures rose 28 cents, or 0.4 percent, to $79.16 per barrel, while US West Texas Intermediate crude futures reached $74.36 per barrel, up 29 cents, or 0.4 percent. .
“The re-emergence of geopolitical tension at the weekend gave a boost to lower crude oil prices upon reopening this morning,” said Tony Sycamore, market analyst at IG Markets.
The US military said on Sunday that fighting had resumed in Gaza and that three commercial ships were attacked in international waters in the southern Red Sea, while the Yemeni Houthi group claimed responsibility for drone and missile attacks on two Israeli ships in the region.
Tina Teng, an analyst at CMC Markets, said that the resumption of the war between Israel and Hamas fueled the upward momentum in oil prices.
“However, oil prices may continue to be under pressure at the present time due to the disappointing pace of economic recovery in China and increased US production,” she added.
Energy services company Baker Hughes PKRO said in its closely watched report on Friday that US oil rigs increased by five to 505 this week, the highest since September.
Oil prices are recovering from a drop of more than 2 percent last week due to investor doubts about the extent of supply cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, which is called the OPEC+ alliance, and concerns about the slowdown in global manufacturing activity.
“Prices are likely to remain volatile and perhaps directionless until the market sees clear data points related to voluntary production cuts,” RBC Capital analysts said in a note, adding that such data would not be available for another two months.
Regarding Russian oil, Western countries have intensified their efforts to implement the maximum price per barrel of $60 on seaborne shipments of Russian oil, which they imposed to punish Moscow because of its war in Ukraine.
On Friday, Washington imposed additional sanctions on three entities and three oil tankers.
What are the key factors influencing oil prices amid geopolitical tensions?
Interview between Time.news Editor and Energy Market Expert
Time.news Editor: Good morning, everyone! Today, we have a very special guest, Tony Sycamore, a market analyst at IG Markets. Tony, thank you for joining us.
Tony Sycamore: Good morning! It’s a pleasure to be here.
Time.news Editor: Let’s dive right in. Recently, we saw a slight rise in oil futures, primarily due to renewed geopolitical tensions in the Middle East. What factors do you think are driving these changes in the oil market?
Tony Sycamore: Absolutely, the geopolitical landscape significantly impacts oil prices. Over the weekend, we witnessed a resurgence of conflict in Gaza, and reports of attacks on commercial ships in the Red Sea have heightened concerns over supply stability. When markets hear about threats to oil transport routes, it tends to create a sense of urgency, prompting an upward shift in prices.
Time.news Editor: That makes sense. You mentioned supply stability—how does the current situation affect OPEC+ decisions regarding production cuts?
Tony Sycamore: OPEC+ plays a crucial role in managing oil supply to stabilize prices. The group has implemented voluntary production cuts in recent months. However, geopolitical tensions can complicate those decisions. While they aim to control the market, a spike in demand or external pressures may force them to reassess their strategy. So, there’s a lot of uncertainty right now.
Time.news Editor: Speaking of demand, how do you see the global demand for fuel evolving in the near future, considering both the geopolitical landscape and economic factors?
Tony Sycamore: Demand is expected to grow, particularly as economies continue to recover from the pandemic. However, it’s a complex equation. Economic growth in major markets like China or the US could drive higher demand, but it must be balanced against potential recessions or economic slowdowns in other regions. If geopolitical situations escalate, we could see demand being affected as well, especially if high prices lead to reduced consumption.
Time.news Editor: So, in a way, it’s a double-edged sword. As an expert, do you think these market fluctuations will stabilize soon, or are we in for a turbulent period?
Tony Sycamore: Turbulence seems to be the theme for the foreseeable future. With the interplay of geopolitics, economic recovery, and OPEC+ decisions all at play, markets are likely to remain volatile. Each new development can send shockwaves through the oil sector, so I would advise stakeholders to stay informed and prepared for rapid changes.
Time.news Editor: Very insightful, Tony. Looking ahead, what advice would you give to investors who are trying to navigate these uncertain waters?
Tony Sycamore: My advice would be to focus on diversification. The energy sector can be unpredictable, so spreading investments across various asset classes may help mitigate risk. Additionally, keeping a close eye on geopolitical developments and OPEC+ communications will be key in anticipating market movements.
Time.news Editor: Thank you, Tony! Your insights are invaluable as we navigate these complex dynamics in the energy market. We appreciate you sharing your expertise with us today.
Tony Sycamore: Thank you for having me! It’s been a pleasure discussing these important topics.
Time.news Editor: And thank you to our audience for tuning in. Stay informed, and we’ll see you next time for more insights on the world’s market developments!