Crude Oil Prices Decline Ahead of OPEC+ Meeting and API Inventories Report

Oil prices experienced a decline on Tuesday, continuing the downward trend from the previous month. This fall in prices comes amid escalating tensions in the Middle East, which have been overshadowed by concerns over weak global demand and the potential rise in supply.

As of 09:20 ET (13:20 GMT), futures were down by 0.9%, trading at $67.58 a barrel, while the contract slid 0.8% to $71.11 a barrel.

### Israel’s Raids into Lebanon

On Tuesday morning, Israel announced the initiation of “limited” raids targeting Hezbollah in the border region of Lebanon. This action raises the risk of escalating conflicts in the oil-rich Middle East, a situation that could potentially involve the U.S. and Iran.

Although a significant escalation could disrupt global oil supply from this crucial region, analysts at ING noted that the market has grown increasingly desensitized to regional tensions. They pointed out that despite nearly a year of conflict, there has been no significant impact on oil production.

### China’s Economic Challenges

The crude oil market faced challenges in September, primarily due to concerns regarding economic weakness in China, the largest oil importer in the world. Recent data revealed a sharp contraction in China’s manufacturing sector for September, according to a private sector survey.

In response, Chinese authorities have rolled out several stimulus measures over the past week, aiming to boost the nation’s growth to around the targeted 5% for 2024. However, the private sector survey indicates that further action may be necessary.

Brent crude prices fell by 9% in September, marking its third consecutive month of losses and the largest drop since November 2022. It also saw a 17% decline in the third quarter, the most significant quarterly loss in a year. Meanwhile, WTI crude dropped 7% last month and 16% for the entire quarter.

### Upcoming OPEC+ Meeting

OPEC and its allies, collectively known as OPEC+, are scheduled to convene for their Joint Ministerial Monitoring Committee meeting on Wednesday. The group plans to increase output by 180,000 barrels per day starting in December, suggesting minimal changes are expected from this meeting.

Currently, OPEC+ is implementing output cuts of 5.86 million barrels per day, accounting for roughly 5.7% of global demand. The industry group is also set to disclose its weekly estimates of U.S. crude oil and fuel inventories for the week ending September 27.