Oil prices experienced a slight decrease on Monday due to concerns about global demand and interest rates, offsetting worries about tensions in the Middle East potentially disrupting supply. Brent futures dropped by 0.5% to $81.77 a barrel, while U.S. West Texas Intermediate (WTI) crude fell by 0.3% to $76.64.
A U.S. Federal Reserve official’s comments about not recommending a rate cut added to concerns about inflation, potentially delaying Fed interest rate cuts and affecting oil demand by slowing economic growth. Additionally, upcoming U.S. inflation data, British inflation, and eurozone Gross Domestic Product (GDP) data are expected to impact market sentiment.
Despite the International Energy Agency’s (IEA) prediction that oil demand will peak by 2030, some market participants, like France’s TotalEnergies CEO Patrick Pouyanne, believe oil demand will continue to rise. Similarly, the Organization of the Petroleum Exporting Countries (OPEC) anticipates increasing oil usage over the next two decades.
Last week, oil prices surged about 6% due to various factors such as threats to shipping in the Red Sea, Ukrainian strikes on Russian refineries, and U.S. refinery maintenance. However, disruptions in the Red Sea caused by Iran-backed Houthis targeting a cargo ship did not significantly impact global crude supply.
Saudi Arabia halted its oil capacity expansion plans, citing the energy transition, while Iraq committed to OPEC’s decisions and maintaining production levels below 4 million barrels per day. In the U.S., oil output in major shale-producing regions is expected to increase to a four-month high in March, according to a federal energy outlook.
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