Oil prices drop over 1% as OPEC demand forecast weakens, Israel signals no strikes on Iranian oil

By Duygu Alhan

Oil prices fell by more than 1% on Tuesday, driven by concerns over demand following recent data from the Organization of the Petroleum Exporting Countries (OPEC) and assurances from Israeli Prime Minister Benjamin Netanyahu that his forces would not target Iranian oil facilities.

Brent crude, the international oil benchmark, dropped 1.2% to $74.55 per barrel at 9.57 am local time (0657 GMT), down from the previous session’s close of $75.43. The US benchmark West Texas Intermediate (WTI) also declined by 1.2% to $70.69 per barrel, compared to $71.56 at the prior session’s close.

OPEC’s latest monthly oil market report, released Monday, lowered the forecast for global oil demand growth for 2024 by 106,000 barrels per day (bpd) from last month’s estimate. The organization now expects total world oil demand to increase by 1.93 million bpd this year, reaching 104.14 million bpd.

Looking ahead to 2025, OPEC also cut its demand growth forecast by 100,000 bpd, anticipating a growth of 1.64 million bpd that year. The reduction is primarily attributed to a projected slowdown in demand from China, the world’s largest oil importer. OPEC now expects China’s oil demand to grow by 580,000 bpd this year, down 70,000 bpd from its previous forecast.

Analysts expressed concern that weakening demand in China could further impact global oil consumption and pressure prices.

In addition, reports that Israel will avoid targeting Iranian oil facilities amid ongoing tensions have eased supply worries. Netanyahu reportedly assured the US that Israeli forces would focus on Iranian military sites rather than oil infrastructure, following warnings from US President Joe Biden against strikes on oil facilities.

International media reports suggest Israel aims to act against Iran before the US elections on Nov. 5 to avoid any perception of weakness. However, the focus on military rather than oil targets has helped mitigate immediate fears of a supply disruption, contributing to Tuesday's price decline.