Global oil prices climb after seven-week decline

WEB DESK: Oil prices saw an increase on Wednesday, recovering from seven-week lows following heightened tensions in the Middle East. The surge was prompted by the assassination of a Hamas leader in Iran, overshadowing concerns over weak demand from China.

By 10:38 GMT, Brent crude futures had risen by $1.80, or 2.29 per cent, to $80.43 per barrel, while the more actively traded October contract increased by $1.85 to $79.92. US West Texas Intermediate (WTI) crude futures gained $2, or 2.68 per cent, reaching $76.73 per barrel.

Additionally, a 0.4 per cent decline in the US dollar index contributed to the price boost, as a weaker dollar makes oil, priced in dollars, cheaper for buyers using other currencies.

The day before, both Brent and WTI had dropped approximately 1.4 per cent, hitting their lowest levels in seven weeks. Tensions escalated following reports that Hamas leader Ismail Haniyeh had been killed in Iran.

This incident came shortly after the Israeli government claimed responsibility for an airstrike that killed Hezbollah’s top commander in Beirut, in response to a rocket attack on Israel. Meanwhile, the United States also carried out a strike in Iraq, adding to the regional conflict.

Gaurav Sharma, an independent oil analyst based in London, commented: “The recent geopolitical developments and heightened risks offer only a temporary boost for oil prices. Unless oil and gas infrastructure is targeted, this price spike is unlikely to be sustained.”

Despite the rebound, Brent and WTI are set to record their largest monthly loss since October 2023 due to ongoing concerns about China’s demand and expectations that OPEC+ will maintain its current production deal and begin reversing some output cuts from October.

An online meeting of the OPEC+ Joint Ministerial Monitoring Committee (JMMC) is scheduled for Thursday.

China’s slowing fuel demand, highlighted by a third consecutive month of contraction in manufacturing activity, continues to pressure oil markets. Charalampos Pissouros, senior investment analyst at brokerage XM, noted: “Persistent worries about Chinese demand, combined with today’s declining PMIs, suggest that any price increases from escalating Middle Eastern tensions may be limited and short-lived.”

In the US, crude, gasoline, and distillate inventories all fell last week, according to data from the American Petroleum Institute.

The Energy Information Administration is set to release its report at 10:30 a.m. EDT (14:30 GMT) on Wednesday, with forecasts indicating a 1.1 million barrel decline in crude inventories for the week ending July 26, based on estimates from ten analysts surveyed by Reuters.

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