Amidst geopolitical tensions and ongoing conflicts, oil prices remained relatively stable as hopes for a ceasefire between Israel and Hamas emerged, while attacks in the Red Sea continued to escalate.
Brent crude oil, against which Nigerian oil is priced, saw a modest rise of 27 cents to $88.67 a barrel while U.S. West Texas Intermediate crude oil gained 30 cents to $82.93 a barrel.
The optimism stems from negotiations between Israel and Hamas with talks in Cairo aiming to broker a potential ceasefire.
Despite these diplomatic efforts, attacks in the Red Sea by Yemen’s Houthis persist, raising concerns about potential disruptions to oil supply routes.
Vandana Hari, founder of Vanda Insights, emphasized the importance of a concrete agreement to drive market sentiment, stating that the oil market awaits a finalized deal between the conflicting parties.
Meanwhile, investor focus remains on the upcoming U.S. Federal Reserve’s policy review, particularly in light of persistent inflationary pressures.
Market expectations for any rate adjustments have been pushed out due to stubborn inflation, potentially bolstering the U.S. dollar and impacting oil demand.
Concerns over demand also weigh on sentiment, with ANZ analysts noting a decline in premiums for diesel and heating oil compared to crude oil, signaling subdued demand prospects.
As geopolitical uncertainties persist and market dynamics evolve, observers closely monitor developments in both the Middle East and global economic policies for their potential impact on oil prices and market stability.