Declining Oil Prices Amid Weak Demand and Increased Supply: Implications for Businesses in Oman
HOUSTON/LONDON: Oil prices declined on Friday as traders considered weaker demand in the United States—the world’s largest oil market—and an expected increase in supply this autumn from OPEC and its allies.
Brent crude futures for October delivery, which expired on Friday, settled at $68.12 a barrel, down ۵۰ سنت یا 0.73%. The more active November contract closed at $67.45, declining by 53 cents یا 0.78%. Meanwhile, West Texas Intermediate (WTI) crude futures settled at $64.01, a decrease of 59 cents یا 0.91%.
Market attention is shifting towards the upcoming OPEC+ meeting, as noted by Tamas Varga, an analyst at PVM Oil Associates. The Organization of the Petroleum Exporting Countries and its allies have ramped up crude output to reclaim market share, contributing to a more optimistic supply outlook that is pressuring global oil prices.
“The bottom line is that we’re anticipating a surge in supply coinciding with a lackluster demand environment,” stated Andrew Lipow, president of Lipow Oil Associates. The U.S. summer driving season will conclude on Monday due to the Labour Day holiday, marking the end of peak demand in the country.
“Market sentiment is starting to question how tariffs may influence economic prospects next year,” Lipow commented, referencing tariffs imposed by the Trump administration on U.S. imports from various trading partners.
Although crude output has increased, those gains have yet to permeate the U.S. market, suggesting a potential tightening in the balance between supply and demand. Phil Flynn, senior analyst at Price Futures Group, remarked, “I do not perceive the anticipated pessimism regarding demand. While OPEC’s supply is set to increase, it seems absent in the U.S., and I believe conditions will remain tight.”
Earlier in the week, prices had risen due to Ukrainian attacks on Russian oil export terminals. However, reports of discussions among Ukraine’s European allies regarding a possible ceasefire have tempered prices.
Data from U.S. crude inventories for the week ending August 22 revealed unexpected draws, indicating robust late-summer demand, particularly in industrial and freight sectors, according to analyst Ole Hvalbye at SEB Bank.
Investors are also monitoring India’s response to U.S. pressure to cease purchases of Russian oil. Following Trump’s decision to double tariffs on imports from India to as much as 50% on Wednesday, Russian oil exports to India are slated to increase in September, according to traders.
“The prevailing sentiment suggests that sanctions against Russia are unlikely and that India will disregard U.S. threats of sanctions, continuing to buy Russian crude oil at significantly discounted rates,” Varga added. — رویترز
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The recent dip in oil prices signals increased supply pressures from OPEC+ amidst weaker demand in the U.S., creating both ریسکها و فرصتها for Omani businesses reliant on oil exports. Smart investors should consider diversifying their portfolios, as the global energy landscape remains volatile, and potential demand recovery in other markets may provide strategic openings. Additionally, entrepreneurs should watch for shifts in پویایی تجارت, particularly regarding India’s stance on Russian oil and its implications for pricing strategies and market access.
