Oil prices fall after recent rally

In a market analysis sent to Rigzone on Tuesday, Mazen Salhab, MENA chief market strategist at BDSwiss, explained that oil prices fell today after a recent rally “as the market assessed the impact of geopolitical tensions and uncertainties surrounding Libyan oil production.”

“The recent increase was also due to concerns about an escalation of the conflict in the Middle East following the military clashes between Israel and Hezbollah in Lebanon,” Salhab said in the analysis.

“Political disputes in Libya could continue to threaten oil production. Since Libya is one of Africa's largest oil producers, any continued disruption could push up oil prices,” he warned.

“Meanwhile, geopolitical tensions in Eastern Europe could also contribute to higher crude oil prices. Attacks on the region's energy infrastructure and concerns about regional stability could make traders more cautious,” he continued.

In his analysis, Salhab noted that “despite concerns about demand, particularly from China, the risk of supply shortages in these regions could keep prices high in the short term.”

In a separate market analysis sent to Rigzone today, Rania Gule, senior market analyst at XS.com, highlighted that “Goldman Sachs… joined Morgan Stanley in lowering its 2025 Brent crude oil price forecast to $77.00 per barrel as OPEC is likely to reverse its voluntary supply cuts.”

Gule explained in this analysis that in her opinion the market is still considering OPEC’s next move.

“Earlier this year, OPEC announced plans to increase production in the fourth quarter as the market recovered, but prices remain low,” Gule added.

“This has caused Saudi Arabia's oil exports to fall to a three-year low of $17.7 billion in June. This could delay OPEC's plans to support prices,” Gule continued.

A macro update on oil prices from Rystad Energy by Svetlana Tretyakova, senior analyst at Rystad, also sent to Rigzone on Tuesday, highlighted that Brent crude futures “rose above $80 a barrel on Monday… marking the third consecutive day of gains.”

“This upturn was due to increasing supply risks resulting from fears of a major conflict in the Middle East following significant rocket and drone attacks between Israel and Hezbollah, as well as production cuts in Libya,” the report said.

“Expectations of looser US monetary policy, boosted by Federal Reserve Chairman Jerome Powell's hints of a possible interest rate cut, have further strengthened market sentiment,” it added.

“However, concerns remain about slowing demand from China and ongoing ceasefire negotiations in the Gaza Strip,” the report warned.

The Rystad report says that Brent crude oil prices in the coming weeks “will continue to be sensitive to the main factors that have dominated pricing in recent weeks.”

“These include developments in the Middle East, changes in Chinese demand and current developments in the US macroeconomic situation,” it said.

The price of Brent crude oil rose from a closing price of $76.05 per barrel on August 21 to a closing price of $81.43 per barrel on August 26. At the time of writing, it is trading at $80.04 per barrel.

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