Despite the collapse of the ceasefire between Israel and Hamas and the closure of oil fields in Libya, a rally in the oil market was short-lived. Oil prices climbed from Thursday, but on Tuesday they fell back below $80 a barrel.
The oil price is currently at $78,68 per barrel. That is still 3,5% higher than last Wednesday, but lower than the peak of the week on Monday (26 August) of $81,43. The weak performance of the Chinese economy continues to play a role in pulling the oil price down.
US interest rates likely to fall
Fed chief Jay Powell gave oil a boost last Friday (August 23) at the annual conference for central bankers in Jackson Hole. There he indicated that inflation in the US is largely under control and it is time to cut interest rates. Although he did not say when, it is assumed that at the next meeting of the Federal Reserve in mid-September a first rate cut of 0,25 or 0,5 percentage points will be taken. The oil price responded positively to this.
Threat of escalation in the Middle East
Developments in the Middle East also supported a rally. On Saturday night, Israel fired attacks on Hezbollah targets in Lebanon. Hezbollah responded with a rain of rockets on Israel. The threat of further escalation is also increasing because, as it turned out on Sunday, negotiations on a ceasefire between Israel and Hamas in Gaza have failed.
Closure of Libya oil fields
After the weekend, the civil war in North Africa's Libya also drove up oil prices. Due to a recent power struggle over the central bank and control over oil supplies, several oil fields are said to have been closed. The country produced 1,18 million barrels per day in July and according to analysts, this could be between 700.000 and 900.000 per day less by the end of this week due to the disruptions. Some analysts expect the production stoppage in Libya to be short-lived.
Diesel price
The price of diesel has risen slightly last week, towards €123 per 100 litres. Two weeks ago it was still around €126.