Oil Prices Increase as Middle East Tensions and Market Gains Drive Weekly Outlook

Oil prices are on track for a weekly gain, supported by rising tensions in the Middle East and positive movements in global markets.

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Brent crude is trading near $79 per barrel, while West Texas Intermediate (WTI) is above $76 per barrel. These increases come after a 1.1% rise on Thursday, driven by good news from the U.S. job market, which also helped lift stock markets. Meanwhile, the U.S., Qatar, and Egypt are urging for new peace talks to resolve the ongoing conflict in Gaza, as the region faces the possibility of an Iranian attack on Israel. These geopolitical issues are causing concerns about potential disruptions in oil supply, which is pushing prices higher.

Earlier this week, oil prices dropped to a seven-month low but have since rebounded. The market is ending a four-week losing streak, thanks to several factors. A shutdown at Libya's largest oil field, six weeks of declining U.S. oil stockpiles, and ongoing military tensions between Ukraine and Russia have all contributed to the rise in prices. Additionally, problems in other oil-producing regions, such as maintenance work in the North Sea and production issues in Nigeria, are tightening the global supply of oil.

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However, experts warn that the recent increase in oil prices might not last. With the end of the peak summer driving season in the U.S. and more oil production expected from OPEC+ next quarter, prices could start to decline again. There is also concern that if global economic growth slows down, demand for oil might decrease, putting downward pressure on prices. Additionally, uncertainty around the Federal Reserve's interest rate decisions could impact oil demand, as higher rates might slow down economic activity.

In China, there is a small but hopeful sign as demand for jet fuel starts to recover. This is a positive change after months of negative news, including a recent report showing that China, the world's largest importer of crude oil, received its lowest oil shipments in nearly two years in July. The increase in jet fuel demand suggests that domestic travel and economic activity in China are picking up, which could support oil prices in the short term. However, China's overall economic outlook remains uncertain, with ongoing concerns about its property market and manufacturing sector.

Moving forward, the focus will be on how the situation in the Middle East evolves, as well as updates on global oil production and inventory levels. Economic data from major economies like the U.S., Europe, and China will also be closely watched to understand the impact on oil demand. With many uncertainties still in play, oil prices are likely to remain volatile in the coming weeks.

Also Read: Oil Prices Near Seven-Month Low Due to Market Selloff and Middle East Tensions