LONDON: Oil prices dipped slightly on Tuesday following a rebound of over 7% in the past three sessions, driven by supply concerns linked to the escalating conflict in the Middle East and the potential shutdown of Libyan oil fields.
By 0819 GMT, Brent crude futures had declined by 30 cents, or 0.4%, to $81.13 per barrel, while US West Texas Intermediate (WTI) crude futures dropped 40 cents, or 0.5%, to $77.02 per barrel.
The recent surge in oil prices was fueled by geopolitical risks in the Middle East and a halt in Libyan oil production. However, market participants are now pausing to assess further developments, according to IG market strategist Yeap Jun Rong. This rise in oil prices reversed the broader downtrend seen since April, when Brent reached its 2024 peak of $91.17.
The earlier downturn was largely attributed to concerns over global crude demand, particularly from China, during what is typically a peak demand period in the summer.
In eastern Libya, oilfields responsible for nearly all of the country’s 1.17 million barrels per day (bpd) of crude output are set to be closed, and production and exports halted, following increased tensions over the leadership of the central bank. This announcement came from the eastern-based administration on Monday, though there has been no confirmation from the internationally recognized government in Tripoli or the National Oil Corporation (NOC), which manages the country’s oil resources.
Additionally, the escalation in conflict between Israel and Iran-backed Hezbollah has further supported oil prices. The conflict saw a major exchange of missiles after the killing of a senior Hezbollah commander last month. Although a top US general noted that the risk of a broader war had slightly eased, the threat of an Iranian strike on Israel remains a concern, keeping markets on edge.
