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14:51 POLITICS

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Oil market constraints, consumer demand and geopolitical situation

2024-02-21 13:11:12, Kosova & Bota CNA

Oil prices fell on Tuesday amid worries about global demand and the fallout from the conflict between Israel and Hamas.

The Brent crude oil market, known as the daily cash contract, ended the day at around $82.34 a barrel. The six-month spread for the Brent market hit its highest level since October on Tuesday, indicating market tension.

The Brent market is seen as the benchmark for global crude oil prices, while the WTI market is concerned with crude oil prices in the United States.

The other West Texas Intermediate crude oil market for March delivery marked a price of $78.18 per barrel. Contracts for the month of April foresee a price of 77.04 dollars per barrel in the US market.

But the rise of about $1.71 a barrel, the biggest in about four months, is prompting energy companies to sell their reserves rather than pay for storage for the coming months. But global developments are significantly affecting the price of oil.

Shipping has faced major disruptions as a result of missile attacks by the Iran-aligned Houthi movement. The terrorist organization has linked its attacks to the conflict between Israel and Hamas. The Houthi movement says its attacks support the cause of Hamas. Terrorist drone and missile attacks have hit at least four cargo ships since Friday. But investors seem more worried about the decline in global oil demand.

China announced the largest ever reduction in lending. John Kilduff, partner in the New York firm "Again Capital LLC" says that the fact that the crude oil market has not had positive reactions shows the depth of the problem of demand for oil from the Chinese market.

An International Energy Agency (IEA) report last week revised forecasts for oil demand through 2024, showing demand falling by almost a million barrels per day less than forecasts by OPEC.

The IEA estimates that global oil demand will increase by 1.22 million barrels per day through 2024. OPEC predicted an increase of 2.25 million barrels of oil per day.

The International Energy Agency, IEA, which represents industrialized countries, predicts that oil demand will peak by 2030, while OPEC expects oil use to continue to grow for the next two decades./ VOA