Stock market crash LIVE: Oil prices down on US recession fears
On Monday, oil prices experienced a slight decline as concerns about a potential recession in the United States, the world’s largest oil consumer, overshadowed worries about escalating tensions in the Middle East and their potential impact on supplies from the region. Brent crude futures dipped 4 cents, or 0.1%, to $76.77 a barrel, while U.S. West Texas Intermediate crude futures fell 13 cents, or 0.2%, to $73.39 a barrel.
The ongoing conflict in Gaza provided some support to prices, with Palestinian officials reporting that an Israeli airstrike hit two schools and killed at least 30 people on Sunday, following unsuccessful talks in Cairo. Israel and the United States are preparing for a significant escalation in the region after “Iran and its allies Hamas and Hezbollah pledged to retaliate against Israel for the killings of Hamas’ leader Ismail Haniyeh and Fuad Shukr, a top military commander from Lebanese armed group Hezbollah last week.” ANZ analysts noted that if the conflict intensifies, crude exports could be affected.
Despite the concerns about rising tensions in the Middle East, Brent and WTI both experienced significant losses on Friday, settling at their lowest levels since January and June, respectively. Both contracts marked their fourth consecutive week of losses, the longest losing streaks since November. The decline in oil prices was attributed to fears of a U.S. recession and OPEC+’s decision to stick to its plan of phasing out voluntary production cuts from October, which went against market expectations of a delay beyond the third quarter.
A Reuters survey revealed that OPEC oil output increased in July, despite the group’s production cuts. In the U.S., the number of active oil rigs remained steady at 482 last week, according to a weekly report by Baker Hughes. Weak economic data from around the world, including disappointing job growth in the U.S. and tepid demand faced by factories in the U.S., China, and Europe, also contributed to the downward pressure on oil prices, as concerns grew about a sluggish global economic recovery and its potential impact on fuel consumption. Additionally, slumping diesel consumption in China, the world’s largest contributor to oil demand growth, is weighing on global oil prices.