Oil prices remained steady on Friday but are set for their fourth consecutive weekly decline as concerns over weak global fuel demand overshadow fears of supply disruptions in the Middle East.
Brent crude oil, against which Nigerian oil is priced, saw a modest increase of 18 cents, or 0.2% to settle at $79.70 a barrel, while U.S. West Texas Intermediate (WTI) crude oil rose by 16 cents, or 0.2%, to $76.47 a barrel.
Despite these slight gains, both benchmarks have experienced losses exceeding 7% over the past four weeks, marking the longest streak of weekly declines this year.
Economic Concerns Weigh Heavily
Analysts attribute the persistent downward pressure on oil prices to lackluster economic growth in major economies, which could dampen oil demand.
“Weak economic growth in major economies could stifle oil demand despite increased tensions in the Middle East that could impact supplies,” commented Panmure Liberum analyst Ashley Kelty.
Economic data from China, the world’s top oil importer, and a survey indicating weaker manufacturing activity across Asia, Europe, and the United States, have heightened fears of a sluggish global economic recovery.
This concern is expected to weigh heavily on oil consumption moving forward. Additionally, falling manufacturing activity in China has further inhibited prices, with June data showing imports and refinery activity lower than the previous year.
Decline in Asian Oil Imports
Data from LSEG Oil Research highlighted that Asia’s crude oil imports in July fell to their lowest level in two years, driven by weak demand in both China and India. This reduction in imports has compounded concerns about global demand growth.
OPEC+ Stance Unchanged
On Thursday, an OPEC+ meeting concluded with the group deciding to keep its oil output policy unchanged. This includes a plan to begin unwinding one layer of production cuts from October.
“Crude futures were marginally higher early Friday … as demand concerns continued to tip the balance against supply worries stoked by a surge in Mideast geopolitical tensions,” said Vandana Hari, founder of analysis provider Vanda Insights.
Middle East Tensions
Despite the demand concerns, oil investors remain vigilant regarding developments in the Middle East. The recent killing of senior leaders from Iran-aligned militant groups Hamas and Hezbollah has stoked fears of potential all-out war in the region, which could threaten oil supplies.
Lebanon’s Iran-backed group Hezbollah announced that its conflict with Israel had entered a new phase and pledged a response following the death of its top military commander in an Israeli strike.
