Oil Prices Open the Week Downward Amidst Optimism for Diplomatic Breakthrough in Gaza

The price of crude oil started the week on an uptrend as Israel provided a temporary halt to its bombing campaign in southern Gaza, indicating a potential decrease in the risk of supply disruptions.

Both Brent crude and West Texas Intermediate experienced a small drop as trade began in Asia. The decline may have been influenced by reports of another Houthi attack on a vessel in the Red Sea.

The remark made by the Iranian Minister of Foreign Affairs has brought about the possibility of a decrease in the price of oil. 

Following conversations with senior Hamas leaders when the minister was in Lebanon, he indicated that there are indicators of diplomatic progress in Gaza. This statement was made after the minister visited Lebanon.

Plains All American Pipeline, in its presentation of its 2023 financial report, forecasted a record-breaking oil output of 6.4 million barrels per day from the Permian Basin this year. This projection adds to the pessimistic picture that has been presented.

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EV Growth Impact Oil Outlook

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The price of crude oil started the week on an uptrend as Israel provided a temporary halt to its bombing campaign in southern Gaza, indicating a potential decrease in the risk of supply disruptions.

Another factor that contributed to the pessimistic outlook was a new oil demand estimate that was released by Goldman Sachs. This prediction highlighted the predicted growth of electric vehicles in China, which presents a threat to the need for oil.

According to the United Kingdom Maritime Trade Operations authority, the Houthi rebels were successful in their attack on another ship that was operating in the Red Sea. A positive development. 

The ship, which was struck by two missiles in the Bab el-Mandeb strait off the coast of Yemen, reflects the geopolitical tensions that are now present. 

As a result of Houthi strikes, marine commerce from the Middle East is being redirected to Africa, despite the fact that the United States and the United Kingdom have taken punitive steps. 

In addition to being aware that this rerouting would have an effect on travel times, it is projected that it will increase oil consumption because of the longer travel durations from Asia to Europe.

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