Oil prices: Crude oil prices rose earlier this week on rising violence in the Middle East, which raised fears that crude oil supplies could be disrupted. Price support was reinforced by signals from the US Federal Reserve about possible interest rate cuts next month. On Monday, oil prices rose 3 percent on reports of a complete production halt in Libya. The government in eastern Libya has announced the closure of all oil fields.Taking this into account, Brent crude futures rose $2.28, or 2.89 percent, to $81.30 a barrel by 1316 GMT, while U.S. crude futures were at $77.30 a barrel, up $2.47, or 3.3 percent. Brent’s intraday high of $81.40 a barrel is the highest the contract has hit in 11 days, Reuters news agency reported. By late morning in Asia, Brent crude rose above $79 a barrel and West Texas Intermediate crude rose above $75 a barrel.But one of the main reasons for this price is that global oil supplies have fallen to their lowest level in two years. Stocks held by the Organization for Economic Cooperation and Development have been 120 million barrels below their 10-year seasonal average, a deficit of 4 percent. U.S. crude supplies have also fallen for several weeks in a row.However, despite the heightened tensions, some market analysts said the impact on oil prices may not be large as the conflicts have lasted for almost a year and have not materially affected oil supplies.However, he added that while recent developments could cause some price increases, escalation of the situation to a point where Iran’s involvement is included is what would be needed to generate risks that would cause any significant influence on the market.US Federal Reserve Chairman Jerome Powell has indicated that interest rates could be cut as early as September, giving further impetus to these moves. Speaking at the Kansas City Federal Reserve’s annual economic conference in Jackson Hole, Wyoming, the Fed chairman said: “The time has come to adjust policy. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”As the global energy market remains in turmoil, all eyes are on the outbreaks of tension in the Middle East and future decisions by the Federal Reserve, which could further influence oil prices in the coming weeks.
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