Oil Prices Fall Again, Offering Relief Amid Global Tensions
Global oil prices extended their decline on Monday, offering a potential economic boost for major importers like India. The drop is driven by hopes for a Gaza ceasefire easing Middle East tensions and persistent concerns over demand in China and the US.
Key Takeaways
- Prices Drop: Brent crude fell to $82.53/barrel, WTI to $78.03/barrel.
- Weekly Loss: Both benchmarks posted their steepest weekly decline in three months.
- Key Drivers: Gaza ceasefire hopes, weak demand outlook in China and US, and Fed rate cut signals.
Market Snapshot: Prices Hit Three-Month Low
Brent crude futures fell 29 cents to $82.53 a barrel, while US West Texas Intermediate (WTI) crude dropped 27 cents to $78.03. This follows a sharp weekly loss where Brent fell over 7% and WTI declined 6.8%, closing at their lowest levels in three months.
Geopolitical Tensions Ease, But Risks Remain
Hopes for a Gaza truce have increased pressure on prices. The US stated negotiations could finalize a deal within a week, with a Hamas delegation meeting mediators in Cairo on Monday. A ceasefire would ease fears of supply disruptions from the oil-rich region.
However, the Israel-Hamas conflict continues into its fifth month. Houthi attacks on commercial vessels in the Red Sea persist, disrupting global oil trade routes.
Demand Worries from Top Importers
Concerns over slowing demand in China, the world’s top crude importer, added downward pressure. Although Chinese imports rose year-on-year for January-February, they were weaker than in preceding months, signaling potential softness.
In the US, Federal Reserve Chair Jerome Powell indicated the central bank still plans to cut interest rates this year but awaits more evidence of falling inflation. Higher rates typically curb economic growth and oil demand.
Supply-Side Developments
On the supply front, the US sanctioned three companies and three vessels for violating the G7 price cap on Russian oil, aiming to limit Moscow’s war revenue.
Additionally, US energy firms reduced oil and gas rig counts for a fifth consecutive week—the first such streak since June 2023—according to Baker Hughes. This suggests a potential tightening of future US output.
