August 30, 2024
New Delhi, India
WTI Oil Prices
West Texas Intermediate (WTI) Oil prices continue to rise, trading around $75.50 per barrel during Friday’s Asian session, driven by growing supply concerns in the Middle East. Key factors behind this increase include Libya’s halted Oil exports and Iraq’s plans to cut Oil production starting next month.
On Thursday, over half of Libya’s Oil production, around 700,000 barrels per day (bpd), was offline, with exports suspended at several ports due to a standoff between rival political factions. Analysts from Rapidan Energy Group suggest that Libya’s production losses could reach between 900,000 and 1 million bpd, potentially persisting for weeks.
Iraq’s Production Cuts and OPEC Compliance
Iraq, having exceeded its production quota set by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plans to reduce its Oil output to between 3.85 million and 3.9 million bpd starting next month. This planned reduction is aimed at aligning with OPEC’s production targets and balancing the market.
Global Demand and Economic Factors
Despite these supply concerns, the rise in WTI prices may be tempered by weakened global demand for crude Oil. Ongoing economic uncertainties in China, the world’s largest Oil importer, continue to weigh on demand. Conversely, the US economy shows modest growth, with the Gross Domestic Product (GDP) increasing at an annualized rate of 3.0% in the second quarter, exceeding expectations.
Potential Support from Federal Reserve Rate Cuts
WTI prices could also find support from expectations of a potential interest rate cut by the Federal Reserve starting in September. Raphael Bostic, President of the Federal Reserve Bank of Atlanta, hinted that it might be “time to move” on rate cuts, citing cooling inflation and a higher-than-expected unemployment rate.
As supply concerns in the Middle East persist, the market remains focused on developments in Libya and Iraq, as well as potential shifts in global economic policies.
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