Oil prices declined on Monday after recording their steepest weekly rise in over a year last week as concerns over softer demand and oversupply countered worries over a wider war in the Middle East, which may cause disruptions to supply chains.
Brent crude futures fell 0.44 percent to $77.71 per barrel as of 5:06 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures declined by 0.36 percent to $74.11 a barrel.
Strongest weekly rise in over a year
Last week, oil prices surged with Brent crude rising 8 percent, marking the largest weekly gain since January 2023. Meanwhile, WTI crude futures gained 9.1 percent, the strongest weekly gain since March 2023. This surge came as the market anticipated an escalation of tensions in the Middle East.
OPEC+ supply
The Organization of the Petroleum Exporting Countries (OPEC) and its allies have significant spare oil capacity due to production cuts in recent years amid slowing global demand. This additional capacity has eased concerns about export disruptions resulting from tensions in the region, particularly in Iran.
Notably, Iran produces nearly four million barrels of oil daily, or around 4 percent of the world’s supply. Therefore, disruptions in the country’s production will likely support oil prices even if OPEC+ members compensate by raising their supply.
During its last meeting on October 2, OPEC+ kept its oil output policy unchanged with plans to start raising production from December.
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China’s stimulus measures
The uncertainty surrounding China’s economic recovery in addition to oil production hikes amid supply disruptions continues to impact the potential upside for oil prices.
Last week, markets signaled optimism regarding the recent economic stimulus measures in China in hopes that they might boost demand.
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