Oil Prices Climb Amid Geopolitical Concerns, Despite Supply Concerns
Oil prices are reacting to escalating geopolitical tensions, even as concerns linger about global supply and demand dynamics. The situation stems from renewed anxieties over European energy security following reported russian military activity near the Polish border, according to Michael McCarthy, CEO of Investment Company “Momo” in Australia and New Zealand.
These tensions are compounded by recent events including Russian strikes targeting West Ukraine near the polish border, prompting Poland and its allies to deploy combat aircraft and estonia to report Russian fighter jet incursions into its airspace – developments prompting a UN Security Council meeting.
Further impacting the market, the recognition of a Palestinian state by four western countries has triggered strong reactions from Israel, raising concerns about regional stability in one of the world’s key oil production centers.
Tho, downward pressure on prices persists due to expectations of a slowdown in global demand. Oil prices fell over 1% at the close of trading last Friday. Iraqi oil marketing company (Sumo) announced a gradual increase in exports following voluntary discounts, in line with an OPEC+ agreement. Average Iraqi exports reached 3.38 million barrels per day in August, with projections of 3.4 to 3.45 million barrels per day for september.
Oil expert Muhammad Al-Shatti noted that upcoming European sanctions on Russian oil buyers will likely pressure Indian companies more than Chinese companies, potentially reducing Russian supplies and driving prices higher.
According to expert Tim Evans, high inventory levels over the past six months indicate that supply continues to exceed demand, creating a challenging market equation between geopolitical support for prices and supply-side pressure.