Oil prices declined by 1% on Friday as concerns over slowing demand highlighted by the International Energy Agency (IEA) overshadowed geopolitical tensions and hopes of U.S. Federal Reserve rate cuts.
Brent crude oil, the international benchmark for Nigerian oil, fell by 1% to $82.04 per barrel while U.S. West Texas Intermediate crude dropped by 0.7% to settle at $77.52 per barrel.
The IEA’s updated supply-demand outlook revealed a loss of momentum in global oil demand growth, resulting in a trimmed 2024 growth forecast.
This contradicts the optimism shared by the Organization of the Petroleum Exporting Countries (OPEC).
Analysts noted that attempts at recovery were short-lived after the release of the IEA report, with oil broker Tamas Varga describing it as shattering hopes for a rebound.
Despite hopes for U.S. interest rate cuts, spurred by a larger-than-expected drop in U.S. retail sales, investors adjusted their positions ahead of a long weekend in the U.S.
Geopolitical tensions persist, with ongoing conflicts in the Middle East adding a risk premium to oil prices.
Gaza’s largest hospital came under siege amidst Israel’s conflict with Hamas, while Hezbollah launched rockets at a northern Israeli town.
Vandana Hari, founder of Vanda Insights, expects these geopolitical risks to continue influencing oil prices in the coming days.