Stock dips for Brent in August, following a three-month upward trend
In the second quarter of the year, Brent crude oil prices experienced a series of ups and downs, with a significant rally followed by a sharp drop.
The quarter began on a positive note, as Brent climbed 7.9 percent to $71.71 in July, marking a high not seen since October 2018. However, this upward trend was short-lived as Brent lost more than $4 in August, settling the month at $67.37 a barrel, a 6 percent drop from July. The loss halted a three-month rally for Brent crude.
The rise in Brent's value in June was aided by Trump's announcement of a trade deal with China, which spurred consumption from the world's top oil buyer. Brent rose 6.2 percent to $66.46 in June, building on the 2.6 percent increase it had seen in May, where it finished at $62.60 a barrel.
However, the end of the summer driving season showed signs of slowing fuel demand, which may have contributed to the drop in Brent's value in August.
Kate Dourian, a journalist and expert specializing in Middle Eastern affairs, currently focusing on topics related to Syria, Iran, and regional security issues, attributed the minimal impact of OPEC+ production increases to the unwinding of voluntary cuts a year ahead of schedule. She also mentioned that much will depend on whether demand is robust enough to keep the market in balance.
In addition to these factors, geopolitical tensions played a role in the crude oil market. Washington imposed new sanctions on oil shipments from Iran and Russia in July, which could have affected supply and demand dynamics.
Trade tensions also continued to shape the crude oil market. Trump extended the deadline for reciprocal tariffs on the EU in May, while the U.S. moved to raise tariffs on Indian goods to 50 percent in August. These developments could potentially impact fuel consumption and production, influencing the price of crude oil.
As the final quarter of the year approaches, expectations of a supply glut are weighing on crude prices. Kate Dourian, a non-resident fellow at the Arab Gulf States Institute in Washington, has suggested that a supply glut in the last few months of the year could lead to weaker prices.
The volatile nature of the crude oil market in the second quarter serves as a reminder of the various factors that influence its prices, from geopolitical tensions and trade disputes to seasonal demand patterns. As we move into the second half of the year, it remains to be seen how these factors will continue to shape the market.
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