Oil Prices Hold Steady Amidst Global Tensions: A 7% Weekly Decline
Oil prices remained stable in early trading on Monday in Asia, showcasing resilience after sharp declines witnessed the previous week. This stability persists amidst ongoing efforts to negotiate a truce in the Israel-Palestinian dispute and the United States intentions to conduct fresh attacks on Iran-affiliated organizations. Brent crude futures saw a modest increase of 8 cents, reaching $77.41 a barrel, whereas U.S. West Texas Intermediate futures remained steady at $72.28 a barrel. Despite geopolitical tensions, both benchmarks concluded the last week with approximately a 7% reduction. The sentiment was partially driven by unexpectedly robust U.S. employment data, suggesting potential delays in interest rate reductions.
Impact of Sanctions: Over 500,000 Barrels of Iranian Oil Confiscated
The geopolitical situation, particularly regarding the Middle East, significantly influences oil pricing dynamics. Following the announcement by the U.S. Department of Justice about sanctions-evasion charges related to an oil trafficking network that supports Iran’s Islamic Revolutionary Guard Corps, authorities seized over 520,000 barrels of sanctioned Iranian oil. This development underscores the persistent tensions between the U.S. and Iran. Iran’s oil exports in 2023 have fluctuated between 1.2 million and 1.6 million barrels per day, making up 1%-1.5% of the global oil supply.
Saudi Non-Oil Sector Growth Dips to 2-Year Low Amid Falling Demand
In Saudi Arabia, the expansion of business activities in the non-oil sector has decelerated to its slowest pace in two years. This indicated a decrease in new order growth and a weakening demand. The Riyad Bank Saudi Arabia Purchasing Managers’ Index, seasonally adjusted, fell to 55.4 in January from 57.5 in December. Therefore marking the lowest level since January 2022. The Output subindex also decreased to 58.1 from 61.0 in December. Although still in expansion territory, the pace of growth in new orders significantly slowed to 60.5 from 68.3 in December, reflecting a loss of momentum in demand.
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