Oil prices have nearly erased all year-to-date gains as shrinking refining margins signal weaker demand for oil.
Oil fell below US$80 a barrel for the first time in more than two months as fresh doubts on whether the Federal Reserve has finished tightening outweighed Saudi Arabia and Russia’s supply cuts.
Saudi Aramco, the world’s largest oil exporter, reported more than a 23% year-on-year decline in its net income for the third financial quarter to $32.6 billion due to relatively lower crude prices and production cuts.
Iran has urged OPEC members to halt oil exports to countries supporting Israel, echoing the 1973 oil embargo, which dramatically increased oil prices and altered global economies.
Brent crude futures rose 55 cents, or 0.65%, to US$85.44 a barrel by 0700 GMT, while U.S. West Texas Intermediate crude was at US$81.14 a barrel, up 63 cents, or 0.78%
Energy giants BP and Shell unveiled sharp downturns in their usual earnings last week in a rocky third quarter for the sector, with the oil and gas industry failing to match last year’s record profits.
The Department of Energy has added a mere 5 million barrels to the reserve thus far this year.
After falling for the first three days of the week, oil prices have started to recover after both the Federal Reserve and Bank of England decided not to hike interest rates.
Oil prices slipped more than 1% on Monday as investors adopted caution ahead of a U.S. Federal Reserve policy meeting and China’s manufacturing data due this week, offsetting support from tension in the Middle East.
The war in the Middle East could push crude oil prices to $150 per barrel if it spreads across the region, the World Bank warned this week.