WionDrive News Desk 
Oil prices experienced a downturn on Tuesday as geopolitical tensions in the Middle East showed signs of easing and worries about China’s economic health persisted. The decline comes as Israel accepted a proposal to address disagreements hindering a ceasefire deal in Gaza, alleviating concerns about potential supply disruptions in the region.
As of 0600 GMT, Brent crude, the global oil benchmark, fell by 67 cents or 0.86% to USD 76.99 per barrel. The U.S. West Texas Intermediate (WTI) crude futures for the front month, set to expire on Tuesday, dropped 62 cents or 0.8% to USD 73.75 per barrel. The more actively traded second-month WTI contract decreased by 63 cents or 0.86% to USD 73.03 per barrel. This decline follows Monday’s more significant drop, where Brent fell approximately 2.5% and WTI eased by 3%.
Market analyst Yeap Jun Rong from IG noted, “Prices seem to find some headwinds from geopolitical developments in the Middle East and China’s demand outlook.” He added that the increased likelihood of a ceasefire deal in Gaza has led market participants to reduce their assessment of risks related to oil supply disruptions due to geopolitical tensions.
U.S. Secretary of State Antony Blinken announced on Monday that Israeli Prime Minister Benjamin Netanyahu had accepted a “bridging proposal” presented by Washington to resolve disagreements blocking a Gaza ceasefire deal. Blinken urged Hamas to follow suit, potentially paving the way for reduced tensions in the region.
Further easing supply concerns, Libya’s Sharara oilfield has increased production to about 85,000 barrels per day, aiming to supply the Zawia oil refinery. This development comes after Libya’s National Oil Corporation declared force majeure on oil exports from the field on August 7 due to a protest-induced blockade that affected production at the 300,000-bpd facility.
On the demand side, China’s economic challenges continue to exert pressure on oil prices. Recent data indicates that the world’s second-largest economy lost momentum in July, with new home prices falling at the fastest pace in nine years, slowing industrial output, declining export and investment growth, and rising unemployment. These factors have reinforced concerns about weaker Chinese oil demand, as noted by ING analysts.
In the United States, a preliminary Reuters poll suggests that crude stockpiles are expected to have decreased by 2.9 million barrels last week. Meanwhile, investors are closely watching for indications of the U.S. Federal Reserve’s plans regarding future interest rate decisions. A recent Reuters poll of economists suggests that the Fed will cut interest rates by 25 basis points at each of the remaining three meetings of 2024, potentially boosting oil demand in the world’s largest oil-consuming nation.
As the oil market navigates these complex factors, traders and analysts continue to monitor geopolitical developments, economic indicators, and policy decisions that could influence future price movements. The interplay between supply concerns, demand outlook, and broader economic trends remains crucial in shaping the trajectory of global oil prices in the coming weeks and months.
