US Recession Jitters Cap Oil Prices Amid Middle East Unrest

5 Aug 2024 , 10:25 AM

Fears of a recession in the United States, the world’s largest oil consumer, countered worries that rising tensions in the Middle East may impact supplies from the major producing region, and on Monday, oil prices remained near eight-month lows.

Brent crude prices had down 4 cents, or 0.1%, to $76.77 a barrel, while U.S. West Texas Intermediate crude futures had dropped 13 cents, or 0.2%, to $73.39 a barrel.

Prices were bolstered by ongoing violence in Gaza, where on Sunday, a round of talks in Cairo ended without agreement and an Israeli airstrike struck two schools, killing at least thirty people, according to Palestinian officials.

Following the announcement last week that Iran and its allies, Hamas and Hezbollah, will exact revenge on Israel for the murders of Hamas leader Ismail Haniyeh and top military commander Fuad Shukr of the Lebanese armed group Hezbollah, Israel and the United States are prepared for a significant escalation in the region.

Fears of a U.S. recession and the Organization of Petroleum Exporting Countries (OPEC+) sticking to its plan to phase out voluntary production cutbacks starting in October caused oil prices to plummet.

Notwithstanding OPEC’s production curbs, OPEC’s oil output increased in July, according to a Reuters survey released on Friday.

According to Baker Hughes’ weekly report, there were 482 active oil rigs in the United States last week. This figure is stable.

Poor economic news from all around the world put pressure on oil prices because of worries that gasoline consumption would decline with a slow global economic recovery.
According to data released last week, the U.S. economy added fewer jobs last month than anticipated as manufacturers in China, Europe, and the U.S. struggled with weak demand.

Global oil prices are being affected by China’s declining diesel usage, which is the country’s primary source of increased oil demand worldwide.

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