As the West Texas Intermediate (WTI) Oil price continues its upward trend, trading at around $75.50 per barrel in Friday’s Asian session, investors are closely monitoring supply concerns in the Middle East. The recent halt in Libya’s Oil exports and Iraq’s plan to reduce production have sparked worries about a potential decrease in global Oil supply, leading to a surge in Oil prices.
On Thursday, a standoff between rival political factions in Libya resulted in the suspension of exports at several ports, causing over half of the country’s Oil production, approximately 700,000 barrels per day, to go offline. Experts from the Rapidan Energy Group have warned that Libya’s production losses could escalate to between 900,000 and 1 million barrels per day and may persist for several weeks.
Meanwhile, Iraq has announced its intention to cut Oil output to between 3.85 million and 3.9 million barrels per day starting next month, as the country has exceeded its production quota set by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Despite the bullish sentiment in the Oil market, concerns about weakened global demand for crude Oil, particularly in China, continue to linger. However, the US economy’s steady growth, with a second-quarter Gross Domestic Product (GDP) growth rate of 3.0%, has boosted investor confidence.
Moreover, the possibility of an interest rate cut by the Federal Reserve in September could provide additional support to WTI prices. Federal Reserve Atlanta President Raphael Bostic’s suggestion of potential rate cuts in response to cooling inflation and higher-than-expected unemployment rates has further fueled market optimism.
Analysis:
The rise in WTI Oil prices due to supply concerns in the Middle East, particularly in Libya and Iraq, highlights the delicate balance between global Oil supply and demand. Any disruptions in major Oil-producing regions can have significant implications for Oil prices worldwide. Investors should closely monitor geopolitical developments and production decisions by key Oil-producing nations, such as Iraq and Libya, to assess potential risks and opportunities in the Oil market.