Brent crude oil lost value in August! 3-month rise followed by blood loss

Brent crude oil broke a three-month upward trend, losing more than $4 a barrel in August due to concerns about US President Donald Trump's imposition of additional tariffs on India and expectations that demand would weaken with the end of the summer travel season in the US. The outlook for global energy demand strengthened after Trump extended the deadline for bilateral tariffs with the European Union. This development led to Brent crude closing the month at $62.60 in May, a 2.6 percent increase compared to the previous month. Trump's announcement in June that a trade agreement had been reached with China increased demand from the two countries, the world's largest oil consumers and importers, putting upward pressure on prices. Consequently, Brent crude oil closed the month at $66.46, a 6.2 percent increase. Expectations that optimism about global trade agreements would stimulate economic activity and, in turn, positively impact oil demand supported the rise in prices in July. The Washington administration's announcement of new sanctions over oil shipments from Iran and Russia fueled concerns about a supply shortage, leading Brent crude to close July at $71.71, a 7.9 percent increase. However, the US's 50 percent tariff hike on goods from India and expectations of weakening demand due to the end of the summer travel season in the US reversed the three-month upward trend in August. Brent crude closed August at $67.37, a 6 percent decline, bringing the price of a barrel of Brent crude down approximately $4.34 compared to July.

"A WEAKENING IN PRICES MAY BE SEEN IN THE LAST MONTHS OF THE YEAR"

Kate Dourian, a visiting scholar at the Washington Arab Gulf States Institute, told Anadolu Agency (AA) that the expectation of excess supply is putting downward pressure on oil prices as the final quarter of the year approaches.

Dourian noted that prices have remained relatively stable despite production increases by the OPEC+ group of oil producers, adding, "If there is a supply surplus in the final months of the year, prices could weaken. However, whether there will be strong enough demand to keep the market balanced in the coming period will determine prices."

Dourian pointed out that market balances could change if sanctions against Iran are reinstated or Washington imposes harsher sanctions on Russia's energy sector, adding that geopolitical and commercial uncertainties, which have increased price volatility throughout the year, continue to have an impact.

"THERE IS A HIGH PROBABILITY FOR PRICES TO DECLINE TOWARDS $50"

Osama Rizvi, Energy and Economic Analyst at the international data company Primary Vision Network, also stated that there may be a supply surplus not only in the crude oil market but also on the product side in the coming months.

Rizvi noted that global refining activity is at very high levels, adding: "However, if this is not met by sufficient demand, which is quite likely, it will lead to increased inventories. Rising diesel demand from electricity generation in Europe could provide some support to prices. However, China's appetite for stockpiles will be the key determinant. I expect prices to remain within a narrow range going forward, with a decline towards $50 rather than $70 appearing more likely."