Oil prices fell on Monday as worries about a potential US recession, the world’s largest oil consumer, outweighed concerns over escalating tensions in the Middle East that could disrupt supply from the major producing region.
Brent crude futures decreased by 4 cents, or 0.1%, settling at $76.77 per barrel. Meanwhile, US West Texas Intermediate (WTI) crude futures were down 13 cents, or 0.2%, at $73.39 per barrel.
The decline in prices occurred despite ongoing conflict in Gaza, where an Israeli airstrike reportedly hit two schools, killing at least 30 people according to Palestinian officials. This attack followed a failed round of talks in Cairo.
The region braces for potential escalation as Iran, Hamas, and Hezbollah vow retaliation against Israel for recent killings of key figures. ANZ analysts noted that intensified conflict could disrupt crude exports.
Despite these concerns, Brent crude fell over 3% on Friday, hitting its lowest point since January, while WTI also dropped more than 3%, reaching its lowest since June. Both benchmarks marked their fourth consecutive week of losses, the longest losing streaks since November.
Oil prices have been pressured by US recession fears and OPEC+’s decision to proceed with phasing out voluntary production cuts starting in October. Market expectations were for a delay in this phase-out.
A Reuters survey reported an increase in OPEC oil output in July despite the group’s production cuts. In the US, the number of active oil rigs remained unchanged at 482 last week, according to Baker Hughes.
Global economic data, including weaker job growth in the US and sluggish factory demand in the US, China, and Europe, has further weighed on oil prices. Additionally, reduced diesel consumption in China, a major driver of global oil demand growth, is contributing to the price decline.