WASHINGTON (dpa-AFX) - Crude oil prices fell on Friday amid concerns about weaker demand in the US due to the summer travel season ending in a couple of days along with intensifying Russia-Ukraine conflict.
WTI Crude Oil for October delivery was last seen trading, down by $0.60 (or 0.93%) at $64.00 per barrel.
Aiming to gain larger market share, the OPEC+ nations recently agreed to increase crude production by 547,000 barrels per day in September. With the current calendar month ending in two days, oversupply concerns due to the alliance's decision are shooting up.
To bring the three-plus-year Russia-Ukraine war to an end, US President Donald Trump used the threat sanctions against Russia on its oil exports along with secondary sanctions to nations buying Russian oil (particularly India) and simultaneously attempted to bring the leaders of the warring nations to the negotiating table.
However, Russia neither succumbed to the threat nor responded favorably to engaging in peace talks with Ukraine.
Yesterday, Russia hit the Ukrainian Navy's largest reconnaissance ship Simferopol in its first sea drone attack, in the Danube river delta, leaving at least 1 killed and several missing. This rising tensions have left traders concerned as sanctions on Russian oil by the West could shake up oil prices.
In the Middle East, talks between Iran and the E3 trio (Britain, France, and Germany) on Iran's nuclear program reached an impasse, with Iran refusing to allow nuclear inspectors to continue their work.
This left the E3 to announce that Iran's nuclear program remains a threat to international peace.
The three-nation group wrote to the UN Security Council yesterday to invoke the Joint Comprehensive Plan Of Action's 'snapback clause.' This initiates a 30-day process to restore UN sanctions on Iran.
While Iran and China have condemned the move, the US Secretary of State has welcomed it. Notably, Iran's crude exports averaged 1.5 million barrels per day in July.
On the demand side, the summer driving season in the US, i.e. from Memorial Day (May 26) to Labor Day (September 1), is coming to an end. Being the world's largest consumer of petroleum by utilizing approximately 20.01 million bpd, a dip in travel in the US raises demand concerns among traders.
Markets are betting for a 25-basis-point rate cut by the US Fed in their upcoming September meeting. The decision could impact US dollar value, which in turn, could influence crude oil prices in the short term.
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