By Firdevs Yuksel
ANKARA (AA) - Oil prices decreased on Tuesday over the prospects of stronger global supply and concerns of slowing demand growth, despite the ongoing conflicts in the Middle East where a vast majority of oil reserves are located.
International benchmark Brent crude fell by 1.38% to $70.71 per barrel at 11.20 a.m. local time (0820 GMT), down from the previous session's close of $71.70.
US benchmark West Texas Intermediate (WTI) fell by 1.55% to $67.11 per barrel after closing at $68.17 in the prior session.
Both benchmarks traded higher after Israel escalated attacks on Hezbollah in Lebanon as fears that a widening conflict in the Middle East could curtail crude supply. The market is weighing whether the Middle East conflict will spread to the rest of the region.
However, the risk of supply disruptions in the Middle East is being offset by the prospect of production hikes from the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as the OPEC+, according to Daniel Hynes, a commodity strategist at the Australia and New Zealand Banking Group.
The group, which made a series of deep output cuts since the end of 2022, is currently cutting supply by around 5.8 million barrels per day.
"Despite its efforts to stabilize the oil market, prices have remained under pressure. This has raised questions on whether the producer group will maintain its current production constraints," Hynes said in an e-mail note.
Moreover, demand uncertainties in China, the world's largest crude importer, also pushed oil prices down by fueling concerns among market players.
Data on Monday was not encouraging for demand, showing China's manufacturing activity shrank for a fifth straight month in September.
Both the OPEC and the International Energy Agency have recently cut their forecasts for 2024 oil demand, citing slower Chinese demand.