Oil posts weekly loss as tensions ease in Middle East and demand uncertainty grows

Opec+ has postponed its meeting from December 1 until December 5

The Opec+ group has total production cuts of 5.86 million barrels per day in place. Reuters

Oil posted a weekly loss as a ceasefire between Israel and Hezbollah eased geopolitical tensions, while Opec+ countries postponed their ministerial meeting amid an uncertain demand outlook.

Brent, the benchmark for two thirds of the world’s oil, fell 0.46 per cent to close at $72.94 a barrel, while West Texas Intermediate, the gauge that tracks US crude, settled down 1.05 per cent to $68 a barrel.

Israel and Hezbollah agreed to a ceasefire this week, although both sides have since accused each other of breaching the deal that began on Wednesday.

“We believe the market has entered into a holding pattern, weighing up the potential price impacts of a second [Donald] Trump term, as well as the outcome of the next Opec+ meeting,” BMI, a Fitch Solutions company, said in a research note.

On Thursday, oil producer alliance Opec+, which includes Saudi Arabia and Russia, announced that it had postponed its meeting from Sunday until December 5, saying the move was made as several ministers were attending the Gulf summit in Kuwait.

The group, which has total production cuts of 5.86 million barrels per day in place, is expected to discuss further delaying plans to bring back barrels to the market. Opec+ has twice delayed the easing of voluntary production cuts of 2.2 million barrels per day. The cuts were initially set to be phased out gradually from October. However, due to market conditions, the start of the plan was postponed until January.

Brent has lost about 20 per cent of its value since reaching $91 a barrel in April on weak Chinese demand and growing supply from non-Opec+ countries. The International Energy Agency has projected that the oil market would record a surplus of one million bpd next year.

“Although we expect Opec+ will opt to roll over the existing cuts into the new year, this will not be sufficient to fully erase the production glut we forecast for next year,” BMI said.

US president-elect Donald Trump this week threatened to impose additional tariffs on goods imported from Canada, China and Mexico on his first day in office, a move that could significantly hamper oil demand growth. Canada and Mexico are two of the largest crude oil exporters to the US, with exports last year of 4.44 million bpd and 910,000 bpd, respectively, the US Energy Information Administration said.

Given the current negative outlook for the oil market and the potential for further price declines under the Trump administration, which begins in January, BMI has lowered its 2025 Brent oil price forecast to $76 per barrel, down from its previous estimate of $78 per barrel.