Oil prices dip with eyes on Libya output, Middle East conflict
2024.08.26 21:51
Investing.com– Oil prices fell in Asian trade on Tuesday, cooling after a strong rebound in recent sessions with traders seeking more cues on production disruptions in Libya and a wider war in the Middle East.
Prices were also subject to some profit-taking after rebounding some 7% over the past three sessions.
expiring in October fell 0.3% to $81.17 a barrel, while fell 0.4% to %77.12 a barrel by 21:03 ET (01:03 GMT).
Expectations of lower U.S. interest rates also boosted oil prices in recent sessions, following a string of dovish signals from the Federal Reserve.
Libya output suspended amid row over central bank
Media reports showed oilfields in eastern Libya- which make up nearly all of the country’s crude output- will be closed, while exports will be halted amid an escalating row over the leadership of the Libyan central bank.
Eastern and Western factions in the country were seen mobilizing military forces amid calls for the ouster of Central Bank of Libya head Sadiq Al-Kabir. The central bank is the only internationally recognized depository for payments for oil exports from Libya.
Libyan oil output stood at nearly 1.2 million barrels per day in July, recent data from the Organization of Petroleum Exporting Countries (OPEC) showed.
Any extended disruptions in oil supplies present tighter global oil markets, and also come amid signs of resilient U.S. fuel demand.
Middle East tensions persist amid no Gaza ceasefire
Concerns over a broader war in the Middle East, after Israel and Hamas did not reach a ceasefire agreement over the weekend, also kept traders attaching a risk premium to oil.
Israel launched a preemptive strike against targets in Lebanon, while the Hezbollah group launched some rocket strikes on parts of Israel.
While both sides signaled they did not seek a further escalation, the strikes further undermined progress towards a potential ceasefire.
Dollar recovery stalls crude rally
While expectations over a September interest rate cut remained in play, the recovered some ground from recent losses on Monday, aided by safe haven demand.
Strength in the dollar stalled crude’s advance, given that a stronger dollar makes oil more expensive for foreign buyers.
