Despite ongoing tensions in the Middle East, the oil market experienced a notable decline on Friday without significant bolstering of oil prices.
This was largely due to a weak demand forecast.West Texas Intermediate (WTI) for March saw a 0.95% drop, settling at $73.25 per barrel.
This occurred on the New York Mercantile Exchange (Nymex).Simultaneously, Marchs Brent crude fell by 0.68%, ending at $78.56 per barrel on the Intercontinental Exchange (ICE).Over the week, WTI experienced a slight rise of 0.78%, while Brent increased by 0.34%.Capital Economics highlighted several factors influencing the market.
These included attacks by Houthi rebels in the Red Sea, United States reactions, Iran tensions, and the Israel-Hamas conflict.Oil Market Dips Amid Middle East Strife and Demand Concerns.
(Photo Internet reproduction)However, these elements did not significantly impact oil prices.
The consultancy noted that weak global demand, increased supply from other regions, and a low likelihood of a broader conflict are curbing investor enthusiasm.Berenberg Bank offered insights into the Red Sea situation.
It labeled the scenario as unpleasant but not catastrophic for global trade.The bank pointed out that 12% of the worlds maritime oil trade traverses the Red Sea.
Currently, companies are opting for the longer, costlier route via the Cape of Good Hope.This shift is a response to the ongoing situation while the United States and allies work to stabilize the region.TD Securities presented a different perspective.
The firm believes that current energy prices have not fully accounted for increasing geopolitical risks.According to the bank, oil prices could be substantially higher if not for the generally pessimistic outlook on commodities.This perspective suggests that market dynamics are complex, with various factors influencing price movements.