Several global factors are pushing oil prices towards an upward trajectory this week. The political tension in Gabon, fuelled by the military coup, threatens oil exports from the country. Gabon is currently the only African country meeting its OPEC production quota with a July output of 211,000 barrels daily.
Although this daily oil production is relatively small and the country is only a minor OPEC exporter, yesterday’s coup announcement caused a price rise due to investors’ supply concerns, with Brent rising by approximately 0.32% to $86 per barrel and WTI rising to US$81.65 per barrel.
However, the decline in China’s manufacturing activity threatened a slowdown in the price hikes this morning due to the energy demand implications of China’s declining economic activity. This, coupled with the anticipation of further US interest rate hikes pending the release of their Personal Consumption Expenditures data, raised uncertainty about the direction of oil prices today. Nevertheless, these factors did not bring down global oil prices, as a steady rise is still observed. The possibility of a shrunken global supply due to production disruptions by Hurricane Idalia and the possible extension of Saudi Arabia’s supply cuts to October is expected to keep global oil prices rising. Analysts believe the short-term outlook for the international oil market is largely bullish and characterized by fewer price distortions.
