SINGAPORE, August 5: Oil prices fell further in global markets on Monday, driven by fears of an impending recession in the United States, a key consumer of oil, Reuters reported.
According to the news agency, these concerns outweighed worries about potential supply disruptions due to increasing tensions in the Middle East, the world’s most significant oil-producing region.
Asian stock markets also saw declines as investors moved away from riskier assets, anticipating that a series of interest rate cuts might be needed to support economic growth.
By 0605 GMT, Brent crude oil had dropped by $1.04, or 1.4%, to $75.77 per barrel, while U.S. West Texas Intermediate (WTI) crude fell by $1.09, or 1.5%, to $72.43 per barrel. This decline followed a more than 3% drop in both Brent and WTI prices on Friday, marking the fourth consecutive week of losses—the longest such streak since November.
Analysts from ING, led by Warren Patterson, noted that weak U.S. job data from July has heightened concerns about reduced oil demand from China, the leading contributor to global oil demand growth. Additionally, China’s declining diesel consumption is adding to the downward pressure on oil prices, Reuters added.
According to the news agency, further pressure on oil prices came after OPEC+ confirmed its plan to gradually phase out voluntary production cuts starting in October, which is expected to lead to an increase in oil supply later in the year.
Despite the pressure on prices, some support came from geopolitical risks in the Middle East. Ongoing conflicts in Gaza, following unsuccessful talks in Cairo, have led to heightened tensions. Israel and the United States are preparing for possible further escalation in the region after Iran and its allies, Hamas and Hezbollah, vowed to retaliate for recent actions.
Tony Sycamore, a market analyst at IG in Sydney, commented on the situation, suggesting that while the likelihood of a wider regional conflict remains low, it cannot be entirely dismissed due to the significant risks involved.
