Oil prices continue to decline as concerns over weakening demand as well as new developments in geopolitical conditions attract attention.
Tensions eased following reassurances from Israel that it will not target Iranian oil infrastructure.
This diminished concerns around potential supply disruptions tied to the ongoing Middle East conflict. As a result, the fizzling geopolitical risk premium could drive oil prices down as the immediate danger diminishes.
Meanwhile, weak global demand projections, particularly from China, have further weighed on oil markets. OPEC recently downgraded its oil demand growth forecast 2024 while China’s September oil imports dropped, reflecting weak domestic demand.
Record-high U.S. oil production and softening demand have put additional strain on prices. While geopolitical tensions could continue to lend some support and prevent sharper declines, sluggish economic growth in the Eurozone and China suggests a volatile and potentially bearish outlook for crude prices in the near term.
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