Oil prices continued their decline on Monday morning, with both Brent and WTI hitting their lowest levels since January. The drop, which began amid turmoil in Bangladesh, was triggered by renewed fears of a U.S. recession following a weak July payrolls report.
Ongoing concerns about demand from China have been a persistent weight on oil prices, and now, fears of a U.S. recession are adding further downward pressure.
The impact of these economic concerns was felt globally, with Asian stocks plummeting and the Nikkei experiencing its largest-ever decline, surpassing the October 1987 crash following New York’s Black Monday.
While demand concerns dominate the oil market’s sentiment, geopolitical risks are still a significant factor. Israel is bracing for a possible retaliatory strike from Iran, prompting the U.S. to send defensive reinforcements to the region.
The U.S. embassy in Lebanon has also advised citizens to leave the country as soon as possible, underscoring the potential for escalating tensions.
At the time of writing, WTI had dropped by over 2.38% to $71.77, while Brent had fallen by 2.08% to $75.21. The oil markets appear poised for another week of high volatility as demand concerns clash with escalating geopolitical risks.
Meanwhile, in July, Saudi Arabia imported fuel oil from Kuwait for the first time in over two years to help meet peak summer power demand, as discounted supplies from Russia declined, according to trade sources and shipping data.
The imports of Kuwaiti high sulfur fuel oil (HSFO) surpassed 180,000 metric tons (approximately 37,000 barrels per day), marking the kingdom’s first purchase from Kuwait since May 2022, as reported by shipping analytics firms Kpler and Vortexa.
The strong demand from Saudi Arabia is keeping more Kuwaiti supply in the Middle East, which has supported benchmark prices in Singapore amid an overall decrease in Middle Eastern exports.
This trade flow is expected to continue into August, with Aramco Trading recently winning a tender for 130,000 tons of very low sulfur fuel oil (VLSFO) from Kuwait’s Al Zour refinery. The cargo is scheduled to load on August 11-12 and was traded at a discount of about $8 to Singapore VLSFO quotes on a free-on-board Kuwait basis.
While Russian supplies still represent the majority of Saudi Arabia’s fuel oil imports—reaching about 441,000 tons in July and accounting for roughly 30% of total volumes—this figure has decreased from nearly 750,000 tons in the same month last year.
In June 2023, Saudi Arabia imported record volumes of discounted Russian fuel oil to meet summer demand while exporting its own production at higher prices.
I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.
