Crude oil poised for a second consecutive increase, despite President Trump's urging for a decrease in oil prices.
The global oil market has seen a series of significant developments over the past week, with key players making moves that could impact prices and supply.
The International Energy Agency (IEA) has revised its expectations for global oil oversupply, predicting a surplus of 1.95 million barrels per day (bpd) in 2025 and a staggering 3.06 million bpd in 2026. This oversupply is partly due to an anticipated OPEC+ production increase of 1.95 million bpd in September 2023, as per the IEA's latest estimates.
Despite these forecasts, oil prices are on an upward trend. Both Brent and West Texas Intermediate (WTI) crude have seen gains this week, with Brent currently trading at $67.39 per barrel and WTI at $63.47 per barrel. This surge has placed oil prices on course for a second consecutive weekly gain.
The increase in oil production is not limited to OPEC+. In August, there was a larger-than-expected increase of 548,000 bpd in OPEC+ oil production, following increases of 411,000 bpd in May, June, and July. OPEC+ had initially agreed to increase oil production by 547,000 bpd for September, but the group later decided to boost production by an additional 137,000 bpd for October.
However, geopolitical factors could disrupt this steady flow of oil. Tensions in Ukraine have led to an increase in attacks on Russia's energy infrastructure, potentially threatening supplies of crude and petroleum products from Russia. Furthermore, both the US and its allies, including the European Union, have been urged to stop buying Russian oil and impose stricter sanctions.
The US economy has also seen some turbulence. The US Federal Reserve lowered its benchmark borrowing rates by a quarter percentage point, indicating two more rate cuts to underpin the weakening US economy. Additionally, the US labour market has softened, with both demand for and supply of workers declining.
In contrast, the housing market has experienced a downturn, with single-family home building plunging to a near two-and-a-half-year low in August.
These developments have had a mixed impact on oil prices. The slight weekly gain underpins the range-bound trading in oil futures, suggesting a period of price stability. However, the potential disruptions in supply due to geopolitical tensions and economic uncertainties could lead to further fluctuations in the coming weeks.
Read also:
- United States tariffs pose a threat to India, necessitating the recruitment of adept negotiators or strategists, similar to those who had influenced Trump's decisions.
- Weekly happenings in the German Federal Parliament (Bundestag)
- Southwest region's most popular posts, accompanied by an inquiry:
- Discussion between Putin and Trump in Alaska could potentially overshadow Ukraine's concerns
