By Adedapo Adesanya
The major crude oil grades in the market, Brent and the US West Texas Intermediate (WTI), lost about 2 per cent on Thursday amid worries of a wider Middle East crisis after the killing of a Hamas leader in Iran, and as investors refocused on demand concerns.
Brent crude futures declined by $1.32 or 1.6 per cent yesterday to $79.52 a barrel and WTI depreciated by $1.60 or 2.1 per cent to $76.31 per barrel.
In the previous session, both benchmarks jumped about 3 per cent as worries about a wider conflict in the Middle East were triggered by the killing of Hamas leader Ismail Haniyeh in Iran shortly after Hezbollah’s most senior military commander was taken down in Beirut, Lebanon.
Market analysts noted that the market is refocusing itself away from geopolitical issues, and looking at global demand for crude.
However, investors were keeping a close eye on any disruptions, particularly to oil shipping lanes as Iran-aligned Houthi militants attacked ships passing through the Red Sea, forcing tankers to choose longer alternate routes.
Also, the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) ministers kept oil output policy unchanged including a plan to start unwinding one layer of output cuts from October.
OPEC+’s policy as agreed in June calls for some members to gradually phase out cuts of 2.2 million barrels per day from October 2024 to September 2025. The group also agreed to extend earlier cuts of 3.66 million barrels per day until the end of 2025.
OPEC+’s Joint Ministerial Monitoring Committee (JMMC) highlighted the commitment of Iraq, Kazakhstan, and Russia—chronic laggards in the agreement to cut oil production— to achieve full conformity, acknowledging their compensation plans for overproduced volumes since January 2024.
OPEC+ members also reiterated that the gradual phase-out of the voluntary production cuts could be paused or even reversed according to market conditions and needs.
Investors are sceptical about Chinese demand, which will restrict the increase in oil prices.
According to a private sector survey released Thursday, China’s manufacturing activity contracted in July for the first time in nine months as new orders fell.
On Wednesday, Chinese government statistics revealed that industrial activity fell to a five-month low in July.
Meanwhile, the Bank of England (BoE) lowered interest rates from a 16-year high on Thursday after the US Federal Reserve Chairman, Mr Jerome Powell suggested Wednesday that interest rates in the US might be slashed as early as September.
Lower interest rates reduce the cost of borrowing, thereby boosting economic activity and oil consumption.
Modupe Gbadeyanka 
Dipo Olowookere