Adedapo Adesanya
By Adedapo Adesanya
Oil futures moved in different directions on Monday as concerns about interest rates and global demand caused the market to take a break after prices jumped about 6 per cent last week.
The price of Brent futures fell by 19 cents or 0.2 per cent to settle at $82.00 per barrel and the US West Texas Intermediate (WTI) crude rose by 8 cents or 0.1 per cent to quote at $76.92 per barrel.
The outlook for inflation a year and five years from now was unchanged, with both remaining above the US central bank’s target rate of 2 per cent.
If inflation worries delay US Federal Reserve interest rate cuts, that could reduce oil demand by slowing economic growth.
US inflation data is expected on Tuesday, while British inflation and euro zone Gross Domestic Product (GDP) data are expected on Wednesday.
The International Energy Agency (IEA), which represents industrialized countries, predicted oil demand will peak by 2030, undercutting the rationale for investment.
Others in the market disagree including the Organisation of the Petroleum Exporting Countries (OPEC) believe oil use will keep rising over the next two decades.
Crude benchmarks rallied about 6 per cent last week due to persistent threats to shipping in the Red Sea, Ukrainian strikes on Russian refineries and US refinery maintenance.
On the geopolitical front, the Iran-backed Houthis in Yemen have targeted shipping with drones and missiles since November in solidarity with Palestinians in Gaza.
The US has led retaliatory strikes on Houthi missile sites since January, but because there has been no substantial effect on oil supply, the market hasn’t reacted.
Reports also said Israel freed two hostages held by Iran-backed Hamas in Rafah in a ferocious rescue operation that killed 74 Palestinians in the southern Gaza City where about one million civilians have sought refuge from months of bombardments.
Saudi Arabia also said the reason behind the kingdom’s recent decision to halt its oil capacity expansion plans was a result of energy transition plans.
The leading OPEC nation said it has plenty of spare capacity to cushion the oil market.
Fellow OPEC member Iraq said it was committed to OPEC’s decisions after its second voluntary cut was announced in December. Iraq also said it was committed to producing no more than 4 million barrels per day.
