Oil Prices Bounce Back Amid Israel-Hezbollah Tensions

31 Jul 2024 , 10:05 AM

Wednesday saw a little recovery in oil futures, which had fallen to 7-week lows as geopolitical tensions increased following Israel’s retaliation against a Hezbollah strike.

However, prices were still being pressured by worries about Chinese demand.

Prior to Wednesday’s expiration, Brent oil futures increased by 39 cents, or 0.5%, to $79.02 a barrel. The more active October contract saw a 47-cent increase to $78.54.

At $75.25 a barrel, U.S. West Texas Intermediate crude futures increased by 52 cents, or 0.7%. On Tuesday, WTI and Brent both closed at their lowest points in seven weeks after falling by roughly 1.4%.

The Israeli government claimed to have killed Hezbollah’s most senior leader in an airstrike on Beirut on Tuesday in response for the cross-border missile attack on Israel on Saturday, which escalated tensions in the Middle East.

Despite diplomatic efforts by U.S. and UN officials to prevent a significant escalation that could inflame the wider Middle East, the most recent incident occurred.

Nevertheless, Brent and WTI are expected to see their largest monthly decline since 2023 in July.

On Thursday at 1000 GMT, there will be an online joint ministerial monitoring committee meeting (JMMC) of top ministers of the Organization of the Petroleum Exporting Countries and their allies, led by Russia. This group is known as OPEC+.

Despite recent significant drops in oil prices, the panel is likely to stick to its present agreement to reduce output and begin reversing some cutbacks from October, five sources from the producer group told Reuters.

The world’s largest importer of crude oil and the main driver of the increase in global demand, China, is slowing down its fuel consumption, which is placing pressure on the oil markets.

On Wednesday, China will disclose official purchasing managers’ index (PMI) data, which is anticipated to indicate that manufacturing activity declined for a third consecutive month in July.

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