The revelation of oil prices on Monday revealed that the market wanted to ease the possible conflict between Iran and the US, but the issues about the decreasing demand for oil crude is starting to resurface.
Benchmark Brent crude futures are currently down 0.5% at $64.86 per barrel, which went 34 cents lower than the previous year. US crude futures, meanwhile, slowly progressed 0.8% at $57.90 per barrel, which is a rise of 47 cents. The last week saw Iran gun down a US drone flying around the Gulf, which added to the tension between the two countries following the unexpected attack on oil tankers the past two months. Iran denied Washington’s claims of a role in the assault, but the market price for Brent went up by 5% while US crude futures climbed 10%.
US President Donald Trump implemented sanctions on Iran. However, Trump chose not to launch an attack in retaliation against the Middle Eastern nation despite the drone attack, which limited the gains in oil price.
Again Capital Management partner John Kilduff thinks that the premium that rose amid the US-Iran tension gained traction as the two countries settled down. However, Kilduff also starts to notice demand and economic concerns rising in the oil market. Meanwhile, Investors are beginning to lose hope for progress in the US, and China’s trade relations as US President Donald Trump and Chinese President Xi Jinping are getting ready for the G20 meeting.
Commerzbank revealed that the fear in slowing demand that is coming from the conflict between China and the US is significantly affecting the oil price. The G20 summit will allow the two presidents to talk about their trade conflict and hopefully increase demand. A massive decline in the market may throw off investors looking to gamble in the oil market.
However, the Federal Reserve Bank of Dallas released manufacturing data that adds worries regarding the declining crude oil demand. The OPEC+, also known as the Organization of the Petroleum Exploring Countries and allies, wants to extend the curbing output deal as the countries meet in Vienna at the start of July.
Alexander Novak, Energy Minister of Russia, revealed that the oil market is stabilizing and is starting to regain its importance in the trade market. The stabilization of the market stems from the cooperation of the participating countries willing to work together to supply the demand for crude oil. However, Novak remains aware that there are concerns regarding the demands.