What will happen to the price of oil in 2024, pressured by wars and uncertainty over economic growth? The focus is entirely on the Red Sea and on a potential escalation that can limit supply.
Oil prices keep fluctuating, influenced by the uncertain dynamics of the war in Gaza and the escalation of tension in the Red Sea.
Brent and WTI prices are falling in mid-morning, but the session on Monday 5 February began with increases in futures recovering from the sharp declines of last week, after Washington pledged to launch further attacks against Iran-backed groups in the Middle East and after Ukrainian drones struck southern Russia’s largest refinery.
Where will oil prices head in the coming weeks? Will they increase due to the strong winds of war that threaten supply? What will happen to demand?
Oil, will the price rise? What could happen
The US-led bombings over the weekend marked the largest attack against the Houthis since the initial operation on January 11, as part of an effort to end severe retaliation against commercial shipping in the Red Sea.
Despite the warning of further attacks, senior US officials have said the country will not be dragged into a prolonged regional conflict. This is a sign of cautious optimism, but the situation remains very precarious and the price of oil jumped at the beginning of the session. A stronger dollar is also making crude oil more expensive for many investors.
Both benchmarks closed about 7% lower last week after stronger-than-expected U.S. jobs data suggested interest rate cuts may be further away than expected ( slowing down demand). Furthermore, news of progress in the negotiations for the ceasefire between Israel and Hamas has given comfort to a potential positive evolution of the war. However, crude oil trades amid uncertainty with the risk of a geopolitically driven supply shock always around the corner.
“As the US avoids directly attacking Iran, we believe that the Israel-Hamas ceasefire talks will have the most dominant effect, thus reducing tensions in the Middle East”, Commonwealth Bank commodities analyst Vivek Dhar notes.
“Oil markets will likely respond by continuing to price in supply disruption risks in the Middle East”, he added, arguing that this would likely keep Brent futures below $80 a barrel.
The Middle Eastern issue, with the widespread conflict in the Red Sea which is also partly diverting oil tankers, and pressuring prices, remains at the center of attention to understand where crude oil will go. However, Russia, growth in China, US oil production, OPEC policy, and global economic forecasts can also influence the price of black gold.
Not just war, what factors can shake crude oil?
Among the news to monitor to analyze oil prices, there is also the announcement by the United States Department of Justice that it has detected illegalities in Iranian sanctions on oil and that it has carried out seizures related to a crude oil trafficking network that, according to him, finances the Iranian Islamic Revolutionary Guard Corps.
We then proceeded with the sanctioned seizure of 520,000 barrels of Iranian oil on board the Abyss oil tanker, which had been anchored in the Yellow Sea en route to China.
Iran’s budget aims to sell oil at 1.35 million barrels per day for the year starting March 2024, about 1.3% of the global supply of 103.5 million barrels per day forecast by the International Energy Agency.
In Russia, two Ukrainian drones struck the largest oil refinery in the south of the country on Saturday, a source in Kyiv told Reuters, the latest in a series of long-range attacks on Russian oil facilities which reduced Russian naphtha exports.
A significant amount of refining capacity is likely to be offline after a fire at the Lukoil PJSC plant in Volgograd in Russia over the weekend, blamed on a drone shot down by Ukraine. Diesel futures jumped 1.8% on Monday, the most in a week.
Original article published on Money.it Italy 2024-02-05 11:30:47. Original title: Prezzo del petrolio, cosa sta per accadere?
