Oil prices declined on Monday, following a selloff in stock markets driven by concerns over a potential US recession. However, the drop was mitigated by disruptions in Libyan oil production and tensions escalating in the Middle East that could impact global crude supplies. Asian equities experienced significant drops as investors moved away from risky assets, anticipating the need for swift interest rate reductions to stimulate US economic growth. By 9:58 a.m. CDT (1458 GMT), Brent crude futures had fallen by 66 cents, or 0.86%, to $76.15 per barrel, marking a low not seen since January. Meanwhile, U.S. West Texas Intermediate crude dropped by 84 cents, or 1.14%, to $72.68. The situation in Libya further constrained supply, with Bloomberg reporting a complete halt in output at the Sharara oil field due to local protests.
The U.S. market's reaction to a disappointing July jobs report also contributed to the cautious trading environment. Phil Flynn, a senior market analyst at Price Futures Group, commented, "The oil and product trade is going to be cautious as the market tries to get a handle on how bad the global market meltdown is going to be." Additionally, reduced diesel consumption in China, a major driver of global oil demand, is exerting downward pressure on oil prices, mirroring the declines seen in European stock markets. Geopolitical tensions in the Middle East also played a role in limiting oil's losses. Ongoing conflict in Gaza, following failed ceasefire negotiations in Cairo, and the potential for a broader regional conflict involving Israel, Iran, Hamas, and Hezbollah are key concerns.
