Released October 15, 2024 | SUGAR LAND
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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Even as the threat of full-out war in the Middle East intensifies, crude oil prices were in retreat to start the week after questions emerged about the health of the global economy.
Conflict has raged since Hamas militants last October stormed the Israeli border, killing some 1,200 people. Israel has since responded by razing much of the Hamas-controlled Gaza Strip and setting its sights further on the Iranian-backed paramilitary group Hezbollah in southern Lebanon.
While reminding Israel of its humanitarian responsibilities, the U.S. military said Sunday it was deploying a high-altitude missile battery system to support Israel in the coming days.
War in the Middle East would usually trigger a significant risk premium for the price of oil given the bulk of the members of the Organization of the Petroleum Exporting Countries (OPEC) hail from the region.
"An assault on oil installations or the halting of traffic through the Strait of Hormuz could, indeed, send oil significantly higher but the underlying oil balance, if left on its own device, will not support oil," Tamas Varga, an analyst at London oil broker PVM, wrote in a Monday research note.
Though Iranian crude oil output is curtailed by Western-backed sanctions, its position on the Strait of Hormuz puts 20% of the world's waterborne crude oil at risk. Shipping lanes are already dangerous because of the frequent attacks by the Iranian-backed Houthi rebel group in the Red Sea and surrounding waters.
But few energy installations have been exposed to risk since fighting began last year, with hurricanes in the Atlantic and wildfires in North America emerging as a main supply-side concern for the year.
On Monday, OPEC economists lowered their estimate for global crude oil demand for the third straight month, guessing that demand for 2024 will show a 1.93 million barrel-per-day (BBL/d) increase from last year, down from the September estimate of 2.03 million BBL/d.
With the Americas expected to drive most of the growth for the year, it's China that's dragging down the estimate as the post-pandemic recovery for the world's second-largest economy, after the United States, has been lackluster. But it's not all doom and gloom.
"Global economic growth has remained robust in 2024 and is projected to continue expanding at approximately 3% through the end of the year and into 2025," OPEC economists wrote.
That, however, wasn't enough to lift crude oil prices. The price for Brent crude oil, the global benchmark, was down 2% in pre-market trading Monday to move in the $77-per-barrel range. It touched $81 on Oct. 6, the eve of the one-year anniversary of the Hamas attacks.
The downturn followed a revision for crude oil prices from the Energy Information Administration (EIA), the data arm of the U.S. Department of Energy. The EIA in its monthly market report for October lowered its 2025 estimate for Brent by a whopping $7 to $78 per barrel.
The EIA said the revision was largely a reflection of the sluggish demand expected last year, though it did not rule out the possibility of geopolitical risk.
"Although we reduced our crude oil price forecast, crude oil prices have risen in recent days because of escalating conflict in the Middle East, raising the possibility of oil supply disruptions and further crude oil price increases," EIA analysts wrote.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Conflict has raged since Hamas militants last October stormed the Israeli border, killing some 1,200 people. Israel has since responded by razing much of the Hamas-controlled Gaza Strip and setting its sights further on the Iranian-backed paramilitary group Hezbollah in southern Lebanon.
While reminding Israel of its humanitarian responsibilities, the U.S. military said Sunday it was deploying a high-altitude missile battery system to support Israel in the coming days.
War in the Middle East would usually trigger a significant risk premium for the price of oil given the bulk of the members of the Organization of the Petroleum Exporting Countries (OPEC) hail from the region.
"An assault on oil installations or the halting of traffic through the Strait of Hormuz could, indeed, send oil significantly higher but the underlying oil balance, if left on its own device, will not support oil," Tamas Varga, an analyst at London oil broker PVM, wrote in a Monday research note.
Though Iranian crude oil output is curtailed by Western-backed sanctions, its position on the Strait of Hormuz puts 20% of the world's waterborne crude oil at risk. Shipping lanes are already dangerous because of the frequent attacks by the Iranian-backed Houthi rebel group in the Red Sea and surrounding waters.
But few energy installations have been exposed to risk since fighting began last year, with hurricanes in the Atlantic and wildfires in North America emerging as a main supply-side concern for the year.
On Monday, OPEC economists lowered their estimate for global crude oil demand for the third straight month, guessing that demand for 2024 will show a 1.93 million barrel-per-day (BBL/d) increase from last year, down from the September estimate of 2.03 million BBL/d.
With the Americas expected to drive most of the growth for the year, it's China that's dragging down the estimate as the post-pandemic recovery for the world's second-largest economy, after the United States, has been lackluster. But it's not all doom and gloom.
"Global economic growth has remained robust in 2024 and is projected to continue expanding at approximately 3% through the end of the year and into 2025," OPEC economists wrote.
That, however, wasn't enough to lift crude oil prices. The price for Brent crude oil, the global benchmark, was down 2% in pre-market trading Monday to move in the $77-per-barrel range. It touched $81 on Oct. 6, the eve of the one-year anniversary of the Hamas attacks.
The downturn followed a revision for crude oil prices from the Energy Information Administration (EIA), the data arm of the U.S. Department of Energy. The EIA in its monthly market report for October lowered its 2025 estimate for Brent by a whopping $7 to $78 per barrel.
The EIA said the revision was largely a reflection of the sluggish demand expected last year, though it did not rule out the possibility of geopolitical risk.
"Although we reduced our crude oil price forecast, crude oil prices have risen in recent days because of escalating conflict in the Middle East, raising the possibility of oil supply disruptions and further crude oil price increases," EIA analysts wrote.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
