It has been almost 2 weeks since Israeli forces entered the Gaza Strip. With the war raging between Israel and Hamas, many experts expected oil prices to surge, but contrary to popular belief, the oil prices are slipping continuously. On Wednesday, oil prices fell almost 4% to a 3-month low with Brent crude oil selling for $81 per barrel.
What is even more interesting is that this happened after Russia and Saudi announced a cut in production on top of the cuts placed by the OPEC+ group. The crude oil prices have been down 17% from a $98 price hit in September.
Many experts believe that the weakening economic condition of China has outweighed the impact of war. China is the biggest consumer of fossil fuels, and any cut in their usage will result in a lower demand for crude oil.
Another reason for the steady slip in oil prices is a robust supply chain. American shale oil companies are producing oil at a high rate and recently upped their output to match the demands. On top of that, Iran is fighting through US Sanctions and finding ways to sell around 1.5 million barrels a day.
This has turned into good news for India as it is an emerging country that has a big oil need and lowered oil prices can relieve India of the burden of oil purchase bills. So, unless another nation joins the war and China continues to cut oil purchases, crude oil prices are expected to go down even more than they already have.