The oil price seemed to fall further at the beginning of this week, but the price has now clearly corrected upwards. Optimism about a ceasefire in the Middle East has turned to fear of an expansion of the conflict across the region. In addition, US commercial oil inventories fell more than expected.
After initially falling in recent days, oil prices subsequently rebounded. On Thursday, July 25, oil traded at $82,37 per barrel. The price fell until Tuesday, July 30. At the low point of the week, oil prices had fallen to $78,63 per barrel. Since then, the price has taken another step up. On Thursday, August 1, the Brent benchmark was trading at $81,50.
Until the beginning of this week there was clear pressure on the oil price. There are two clear reasons for this. Firstly, the weak economy continues to put constant pressure on oil prices. In addition, the influence of the geopolitics of the Middle East turned out to be great. Last week, optimism about a ceasefire between Israel and Hamas put pressure on oil prices. When the enthusiasm of both parties was tested, this did not lead to a new increase. Especially because Israel has clearly stated that the country is not looking for a full-scale war in the region.
Geopolitical problems
That sentiment has now changed again and is causing a clear increase in the oil market. Oil prices rose by almost 3% after Israel decided to eliminate Hamas leader Ismail Haniyeh in the Iranian capital Tehran. In response, Iran indicated that Israel will pay a high price for the action. In addition, Israel claims to have eliminated Hezbolla chief Fuad Shukr. The Jewish state says Shukr is responsible for a rocket attack on the Golan Heights that killed 12 people. Hezbollah denies any involvement in the attack. Despite the reassuring words from the Jewish state, the market is not confident that things will remain calm in the Middle East.
In addition, greater demand in the United States is driving higher oil prices. The US Energy Agency (EIA) has determined that US commercial oil inventories have fallen by 3,43 million barrels. This is a significantly larger decline than the market's expectations. A leading Reuters poll shows that economists expected reserves to fall by 1,6 million barrels. This meant that reserves fell more sharply than expected for the fifth time in a row. For that period, oil companies consistently overestimated demand, causing inventories to predominantly increase. This situation has now reversed and that is mainly a seasonal effect. Oil demand generally increases in the summer as Americans often fly to visit their families during this time.
Diesel price rises
Meanwhile, diesel prices have taken a step up before falling. On Thursday, July 25, diesel traded for €127,24 per 100 liters. On Friday, July 26, the price was at the highest point of the week, at 127,95. Then diesel mirrored the decline in the oil market. The price was at its lowest on Wednesday, July 30, at €125,77, before correcting slightly upwards again.