Oil declines as geopolitical tensions ease
Oil prices are finishing the week with losses due to the news flow regarding the ceasefire talks between Israel and Hamas.
The decrease in geopolitical tensions in oil prices causes downward price movements.
Brent oil has fallen by more than 6 percent this week. Brent oil prices were tested below $84 on the last trading day of the week. US crude oil is traded around $79.
The impact of the developments in the Middle East is especially felt in this movement in oil. According to the latest news from the region, Hamas is working on a temporary ceasefire proposal with Israel and plans to send a delegation to Egypt to continue negotiations.
Meanwhile, data from the US this week showed another decline in fuel demand ahead of the summer season.
Oil has fallen nearly 10% from a five-month high in mid-April as the effects of Iran’s attack on Israel remain limited and Washington pushes for an end to the conflict in Gaza.
A surprise increase in U.S. crude oil inventories on Wednesday sent futures lower, contributing to concerns about demand from top importer China and weakness in product markets for products such as diesel and gasoline.
Westpac Banking Corp. Robert Rennie, Head of Commodity and Carbon Strategy, said: “The geopolitical premium is rapidly pricing in as Israel appears more willing to accept the hostage deal. It’s hard to see a big rise above the $90-$95 region for Brent, and a dip below $85 would indicate a major top is forming.” ”
OPEC+’s decision is also being closely monitored
In the oil market, OPEC+’s decision on production cuts is also at the top of the agenda.
While almost 90% of traders and analysts participating in a Bloomberg survey predicted that the coalition would extend production cuts at its June 1 meeting, the downward move revived expectations that OPEC+ would extend production cuts.
Differences of opinion are expected at the meeting after the United Arab Emirates’ main oil company announced that it was increasing its production capacity.
OPEC will “make a difference in terms of supply-demand balance,” Shell Plc Chief Financial Officer Sinead Gorman said in a teleconference on the balance sheet on Thursday.
The International Energy Agency warned last month that global oil markets could return to oversupply if the group and its allies ease supply restrictions as demand slows.