Oil steadies after sharp declines last week

by Jonathan Adams
oil rally

Brent crude futures edged up 8 cents to $77.41 a barrel, while U.S. West Texas Intermediate futures were flat at $72.28 a barrel

Oil prices steadied in early Asian trading on Monday after sharp declines last week, amid continued efforts to reach a ceasefire in the Middle East conflict.

Brent crude futures edged up 8 cents to $77.41 a barrel by 0131 GMT, while U.S. West Texas Intermediate futures were flat at $72.28 a barrel.

Both benchmarks ended last week down nearly 7%. They dropped 2% on Friday after stronger-than-expected U.S. jobs data indicated interest rate cuts could be further out than expected, and on progress in ceasefire negotiations in the Middle East.

However, investors remained wary of any escalation in the conflict, after the U.S. signalled further strikes in the region.

The U.S. also continued its campaign as attacks on shipping vessels have disrupted global oil trading routes, although supply has been largely unaffected.

Given the US military strikes avoid directly attacking Iran, we think the ceasefire talks will have the more dominant effect ‑ thereby reducing Middle East tensions, said Commonwealth Bank commodities analyst Vivek Dhar.

Oil markets will likely respond by continuing to discount supply disruption risks in the Middle East, he stated in a client note on Monday, adding that would likely keep Brent futures below $80 a barrel.

On Friday, the U.S. Department of Justice (DoJ) announced sanctions-evasion charges and seizures linked to an oil trafficking network.

It seized over 520,000 barrels of sanctioned Iranian oil aboard the crude tanker Abyss, which had been anchored in the Yellow Sea en route to China.

Iran exported between 1.2 million and 1.6 million bpd of crude oil through most of 2023, representing 1%-1.5% of global oil supply.

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