Oil prices have shown signs of recovery on Monday, with political unrest in the US and the Middle East providing support to prices. Despite a stronger dollar and weak demand in China, Brent crude futures rose by 0.2% to $85.18 per barrel, while the US West Texas Intermediate crude reached $82.41 per barrel, up by 0.2%. The failed assassination attempt on U.S. presidential candidate Donald Trump led to a stronger dollar, but the uncertainty surrounding the incident has impacted the market.
In the Middle East, talks regarding the Gaza conflict between Israel and Hamas have been halted, with a Hamas official stating that discussions have not been withdrawn. However, an Israeli attack targeting Hamas’s military leader resulted in the death of 90 people, adding to the geopolitical tensions in the region. This uncertainty has kept the geopolitical premium in oil prices elevated, along with supply cuts from OPEC+ member countries.
Last week, Brent crude prices fell by more than 1.7% after four consecutive weeks of gains, while WTI futures slid by 1.1%. This decline was attributed to a fall in China’s crude oil imports, which decreased by 2.3% in the first half of the year. Chinese refineries also reported a 3.7% decrease in crude throughput in June, the lowest level of the year, as weak profit margins led independent refiners to cut output. China’s economic growth has slowed in the second quarter, prompting expectations of more stimulus from Beijing.
In the United States, the active oil rig count, a key indicator of future oil output, fell to its lowest level since December 2021, with a total of 478 active rigs last week. This decline reflects the impact of geopolitical tensions and falling demand on oil production. Despite these challenges, oil markets remain underpinned by ongoing supply cuts and geopolitical uncertainties, which continue to influence oil prices globally.
Overall, the oil market’s recovery is being supported by political developments in the US and the Middle East, in addition to supply cuts from OPEC+ countries. Challenges posed by a stronger dollar and weak demand in China have dampened price growth, but ongoing geopolitical tensions have kept the oil market volatile. As the energy landscape continues to evolve, factors such as economic conditions, supply and demand dynamics, and geopolitical events will play a significant role in shaping oil prices and market sentiment in the coming months.
