Oil prices experienced volatility on Tuesday, reflecting concerns over escalating conflicts in the Middle East and a production decline at Libya’s largest oilfield. Brent crude futures were down 9 cents to $76.21 a barrel, while West Texas Intermediate (WTI) fell 8 cents to $72.86. Both benchmarks had initially gained over $1 earlier in the session.
Market analysts noted that despite early gains driven by supply disruption fears, the overall sentiment remained negative due to disappointing U.S. job growth data and weak economic signals from China. On Monday, both oil benchmarks dropped about 1% as recession worries impacted global stock markets.
Tensions in the Middle East, particularly regarding Iran’s potential retaliation against Israel and the U.S. following recent attacks, have raised supply concerns. Additionally, Libya’s National Oil Corporation announced a gradual decrease in production at the Sharara oilfield due to protests, further contributing to supply fears.
However, weak demand, especially from China, has limited the ability of oil prices to rally. Analysts pointed out that the anticipated seasonal increase in demand for Q3 has not materialized as expected, with consumption of fuels like gasoline and diesel falling short of bullish forecasts.
Saudi Aramco reported a 3.4% decline in second-quarter profits, citing lower crude volumes and refining margins, although they noted significant growth in China. Meanwhile, a broader recovery in Asian equity markets provided some support to oil prices.