Oil prices dip amid Middle East tension and weaker global demand
Oil prices on the New York fuel exchange are falling after a five-day streak of increases. Brokers report that investors are assessing the likely escalation of conflict in the Middle East and signs of weakening demand for oil globally.
A barrel of West Texas Intermediate oil for September delivery costs CAD 109.21 on NYMEX in New York, down by 0.54%.
Oil prices are falling
Brent on ICE for October delivery is priced at CAD 112.14 per barrel, down by 0.64%.
Players are evaluating the risk of escalation of conflict in the Middle East and worrying signs of weakening global demand for fuel.
The United States expects a "significant wave of attacks" from Iran and its allies on Israel, which could happen as early as this week.
Iran could carry out "significant" attacks on Israel as early as "this week," said National Security Council spokesman John Kirby on Monday.
He added that the U.S. assessment aligns with what Israeli services are expecting.
Kirby noted that over the weekend, the Pentagon announced the deployment of an additional nuclear-powered submarine to the Middle East region and the accelerated deployment of a second aircraft carrier, the USS Lincoln, to the area.
The anticipated retaliation by Iran on Israel for the assassination of Hamas political leader Ismail Haniyeh in Tehran was also the subject of Monday's talks between U.S. President Joe Biden and leaders of the United Kingdom, France, Germany, and Italy.
Oil demand is weakening
Meanwhile, markets show weaker oil demand, prompting OPEC countries to lower their demand forecasts for 2024 and 2025.
The monthly OPEC report indicates that the organization has reduced its global oil demand growth forecasts by 135 thousand barrels daily.
This is the first significant change in OPEC forecasts. However, the cartel still expects global oil consumption to rise by a "healthy" 2.1 million barrels per day this year, reaching an average of 104.3 million barrels per day.
OPEC and its allies (within the OPEC+ framework) must decide in the coming weeks whether to continue plans to resume larger crude production from October.
For now, the group and its partners plan to increase oil supplies to global fuel exchanges by approximately 543 thousand barrels per day in the fourth quarter. This is the first stage of returning 2.2 million barrels per day to markets by the end of 2025.
OPEC+ has been cutting oil production to global markets for nearly two years to prevent an oversupply of crude due to increasing deliveries from both Americas, led by the United States, Brazil, and Guyana.
