Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Oil prices settle lower as demand fears overshadow Middle East tensions

Published 20/02/2024, 01:40 pm
Updated 21/02/2024, 06:44 am
© Reuters. Oil prices settled lower Tuesday, as investors weighed worries about weaker demand against rising geopolitical conditions in the Middle East that threaten to potentially disrupt supplies.  

By 14:30 ET (19:30 GMT), the U.S. crude futures settled 1.3% lower at $78.18 a barrel and the Brent contract dropped 1.4% to $82.43 a barrel.

Middle East tensions continue anew

Middle East tensions escalated further following a fresh attack on a UK commercial vessel in the Red Sea and ongoing fighting between Israel and Hamas in the Gaza strip. 

The U.S. has called for a temporary ceasefire in the war, and has also said that it opposes a major ground offensive by its ally Israel in the city of Rafah.

That said, Israel still appears set to march into Rafah, a move that would sharply worsen the humanitarian crisis in Gaza.

Fears of increased supply disruptions have been the biggest driving force for oil prices in recent weeks, although prices are still trading well below highs hit in early-2022. Concerns over slowing demand also saw crude prices clock a 10% decline through 2023. 

China-led demand concerns continue

Demand worries, led by softer economic growth in China, continued as the People's Bank of China unexpectedly cut its key five-year loan prime rate on Tuesday, though held its one-year medium-term lending facility, a key lending rate, steady at 2.5%. 

The move to stay pat on rates kept concerns about sluggish economic growth in China, the second largest consumer of crude oil just as other global economies are also showing signs of struggle as the UK and Japan slipped into recession in Q4.

That said, prices remained underpinned by persistent concerns over supply disruptions in the Middle East, as the Yemeni Houthis continued to clash with U.S. forces, while the Israel-Hamas war raged on.

(Peter Nurse, Ambar Warrick contributed to this article.)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.