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The price of fuel, falling despite the conflict in the Middle East

2024-09-30 22:10:00, Kosova & Bota CNA

Fuel prices remained steady on Monday and are expected to continue falling for a third month in a row, as data on production and demand levels overcame concerns that Israel's attacks in Lebanon and Yemen could escalate the conflict in the Middle East.

The main reference prices forecast for November fell by 10 cents to $71.88 per barrel and the decline is expected to continue in December. If the projected decline continues, this is expected to be the biggest price drop since November 2022.

On Monday, the market grappled with the possibility that Iran, a major oil producer and OPEC (Organization of the Petroleum Exporting Countries) member, could be drawn into direct involvement in the widening conflict in the East. Medium.

Since last week, Israel has stepped up attacks, killing Hezbollah and Hamas leaders in Lebanon, as well as striking Houthi targets in Yemen. All three of these organizations are supported by Iran.

"We think that some of the companies in the market will not be affected as much by the escalation, given that there has not been a major physical disruption and Iran has not shown any desire to become part of this nearly year-long conflict," said Helima Croft. , from the firm "RBC Capital Markets".

Fuel prices did not react following Beijing's announcement last week of fiscal stimulus measures. China has the second largest economy in the world and is among the main fuel importing countries.

Fuel trading companies question whether Beijing's measures will be enough to boost demand, which has been lower than expected this year.

Monday's data is not encouraging for demand in the Chinese market. Manufacturing activity in China continued to decline for a fifth straight month, and the services sector slowed sharply in September.

The announcement that exports of half a million barrels of crude oil from Libya can be reintroduced to the market seems to have influenced the price reduction, as a dispute with the central bank is expected to be resolved. It was also announced that Saudi Arabia may abandon the target of reaching a price of $100 per barrel and that the OPEC+ organization will start from December to soften the voluntary reduction in the amount of fuel that is put on the market.

Later on Monday, the markets will also be waiting for a speech by the chairman of the US Federal Reserve, Jerome Powell, to receive any signal regarding the pace that will be followed for the easing of monetary policies./ VOA