Concerns Over Middle East Tensions Drive Oil Prices Up

Oil prices have slightly increased today, Tuesday, amid concerns that tensions in the Middle East would disrupt supplies.

However, uncertainty about the pace of potential cuts to US interest rates and their impact on fuel demand have limited the gains.

At 04:20 GMT, the Brent futures rose by seven cents or 0.1 percent to $82.07 per barrel.

Meanwhile, the US WTI crude increased by ten cents or 0.1 percent to $77.02 per barrel.

Oil prices were relatively stable in yesterday’s trading, after recording a six percent increase last week.

However, concerns about interest rates have limited gains in oil prices. The Federal Reserve Bank in New York said its survey of consumer expectations for January showed that inflation expectations after one year and five years from now have not changed, with both remaining above the Federal Reserve’s target rate of two percent.

If concerns about inflation lead to a delay in the US Federal Reserve’s interest rate cuts, this could reduce the demand for oil by slowing economic growth.
It is expected that US inflation data will be released today, Tuesday, while Eurozone inflation and gross domestic product data are scheduled for release tomorrow, Wednesday.

As market participants await sector data on US crude inventories, which is scheduled to be released later today.

It is also scheduled for the Organization of the Petroleum Exporting Countries (OPEC) to release its monthly report on the oil market today, Tuesday. Iraq, a member of OPEC, stated yesterday that it is committed to the organization’s decisions and will not produce more than four million barrels per day.

Analysts from AI. Jane in a memorandum on Tuesday stated, “The most interesting issue in the coming weeks will be what OPEC+ decides to do regarding the voluntary supply cuts that are set to expire at the end of March.”

“They stated that our budget indicates that the market will have a surplus in the second quarter of 2024 if the group does not extend some of these reductions.”

In March, the OPEC+ group, consisting of OPEC and its allies including Russia, will decide whether to extend voluntary oil production cuts in the first quarter.

In November, OPEC+ agreed to voluntary production cuts totaling approximately 2.2 million barrels per day for the first quarter of this year, led by Saudi Arabia with a voluntary reduction of one million barrels per day.
«reuters»