Oil prices fell in the global market on Friday, affected by the decline of Hurricane Rafael’s threat to oil and gas production in the Gulf of Mexico in the United States, as the hurricane did not cause a significant impact on production operations as initially expected. This decline comes amid a state of anticipation in the markets for the impact of President-elect Donald Trump’s policies on global oil supply, as his statements and economic orientations raised questions about the stability of the market, which led to a wave of selling that led to a fall in prices.
In terms of actual prices, Brent crude futures fell 26 cents, or 0.3%, to $75.37 a barrel by 0209 GMT, while U.S. West Texas Intermediate crude rose 35 cents, or 0.5%, to $72.01 a barrel. The slight rise in WTI came after the two benchmarks posted a rise of almost 1% in Thursday’s trading session. For the week, Brent is expected to rise 3.1%, while WTI will rise 4.1%. The markets are watching with anticipation the developments of the political situation in the United States and the changes in supply and demand for oil, as price stability plays an important role in the economic decisions of producing countries.
Oil prices continue to fluctuate amid multiple factors, including the easing of Hurricane Rafael in the Gulf of Mexico, which reduced concerns about US supplies. Despite this decline, global markets remain vigilant to the impact of President-elect Donald Trump’s upcoming policies on the energy sector, which could add more volatility to oil prices in the coming period.
Factors Affecting High Oil Prices
Oil prices are influenced by a complex set of economic, political, and environmental factors that continuously interact to determine price trends in global markets. One of the most important economic factors affecting oil prices is supply and demand, as rising demand in major economies, such as China and the United States, often pushes prices higher. In contrast, lower global demand due to slowing economic growth leads to lower prices. Political and geopolitical developments also play an important role, as political crises and conflicts in key production regions, such as the Middle East, affect oil flows and supply stability, causing significant price fluctuations. Decisions by the Organization of the Petroleum Exporting Countries (OPEC) and its allies lead to significant changes in production and export levels, and markets respond by rising or falling prices depending on the level of supply provided by OPEC.
Natural disasters, such as hurricanes in the Gulf of Mexico, can disrupt production and reduce oil supply, leading to higher prices. Environmental legislation, especially those that restrict carbon emissions or encourage the use of alternative energy sources, also plays a role in influencing oil demand by limiting the use of fossil fuels. Global trends towards renewable energy and the shift to more sustainable energy sources have a long-term impact on oil demand and prices. As innovations in clean energy increase and governments adopt strict climate policies, dependence on oil is expected to decline, potentially limiting price rises. But the global energy transition takes time, and during this period, oil prices will remain volatile due to a combination of variable factors. Oil prices depend on a range of interrelated factors, including economic changes, government policies, and climate developments.
The impact of weak supplies on the oil market
Weak supplies have direct and noticeable effects on the oil market, causing increased price volatility and creating uncertainty in global markets. When political crises, natural disasters, or production decisions by oil-producing countries interrupt or reduce global oil supplies, prices generally rise because demand for crude remains steady or grows. These effects increase when shortages occur in key areas of production such as the Middle east or the Gulf of Mexico, where Oil facilities for geopolitical attacks or developments that lead to production disruptions.
Oil markets during periods of weak supplies struggle to meet global demand, reinforcing fears of a protracted supply shortage. Rising energy costs drive up prices, affecting the global economy. The increased costs impact production and transportation across various sectors. This rise in prices may lead to inflationary pressures and negatively affect economies that rely heavily on oil imports.
Weak supplies could fuel increased investments in alternative energy, as many countries and companies seek to reduce their dependence on crude oil by seeking more sustainable. However, this shift does not occur immediately, making markets more sensitive in periods of disruption or decline in supplies. Weak supplies also lead to long-term effects on the policies of oil-producing countries, especially those that participate in alliances such as OPEC. In such cases, these countries may conclude agreements that determine production levels, exacerbating conditions in global markets and increasing volatility. Ultimately, weak supplies are one of the critical factors shaping the future of oil prices and significantly affecting the stability of global markets.
