Oil Prices Rise Amid Geopolitical Tensions: What This Means for Investors and Businesses in Oman
LONDON: On Thursday, oil prices saw a slight increase, driven by indications of reducing trade tensions, unexpectedly strong economic data from major oil-consuming nations, and escalated risks emerging from the Middle East.
As of 08:56 GMT, Brent crude futures climbed by 17 cents, approximately 0.3%, reaching $68.67 a barrel, while US West Texas Intermediate crude futures rose by 31 cents or 0.5%, settling at $66.69.
John Evans, an analyst at PVM Oil Associates, noted, "The market’s focus has shifted somewhat away from the Middle East. Recent reminders of Israeli strikes in Syria and drone attacks on oil infrastructure in Kurdistan have reintroduced volatility into the market."
He added, "Any further incidents that restrict oil supply will only bolster the narrative surrounding low inventories, and we anticipate that prices will hold steady, with potential for upward movement."
In Iraq’s semi-autonomous Kurdistan region, drone attacks have reportedly reduced crude production by up to 150,000 barrels per day, as confirmed by two energy officials on Wednesday, due to significant damage to infrastructure.
Additionally, US President Donald Trump announced that letters informing smaller countries of their tariff rates would be distributed soon. His optimistic outlook regarding potential agreements with Beijing on illicit drugs, as well as negotiations with Europe, has reassured investors.
Independent analyst Tina Teng commented, "Trump’s softened rhetoric regarding China and his proposal for lower tariffs on smaller nations are viewed as positive for the global trade climate."
Moreover, favorable economic data from China and a larger-than-anticipated reduction in US oil inventories have supported oil prices. The Energy Information Administration reported a drop of 3.9 million barrels in US crude inventories, bringing the total down to 422.2 million barrels last week. This suggests increased refinery activity and stronger demand.
However, larger than expected increases in gasoline and diesel inventories tempered price rises, sparking concerns about potential declines in demand due to waning summer travel, according to analysts at ANZ.
Data also revealed that China’s crude oil throughput in June rose by 8.5% year-on-year, indicating heightened fuel demand.
Special Analysis by Omanet | Navigate Oman’s Market
The recent rise in oil prices signals a critical opportunity for businesses in Oman, especially those in the energy sector. However, renewed risks in the Middle East and a potential demand slowdown from key markets highlight the need for strategic investments. Smart investors should consider positioning themselves to capitalize on fluctuations while remaining vigilant about geopolitical tensions impacting supply chains.
