Oil prices declined on Monday as worries about the oil demand outlook overshadowed concerns over tensions in the Middle East.
At the moment of writing this, Brent crude futures were down 1.1% at $82.62/barrel, and the March contract for U.S. West Texas Intermediate (WTI) crude was down 1.0% at $77.66.
The International Energy Agency (IEA) noted in its monthly report last week that global oil demand growth is losing momentum. According to the IEA, growth in the consumption of in the world slowed by about 35% QoQ to nearly 1.8 million barrels per day in the fourth quarter of 2023 due to weaker demand from China. “The expansive post-pandemic growth phase in global oil demand has largely run its course,” the IEA stated. For 2024, the IEA predicts the global demand to rise by 1.2 million barrels per day or only half the rate of 2023.
Another factor fueling concerns over oil demand was Friday's report on producer prices in the U.S., the world's biggest oil user. Investors fear that sticky inflation and elevated interest rates would cap fuel consumption growth.
However, further declines in oil prices were limited due to ongoing tensions in the Middle East. On Saturday, Yemen's Iran-aligned Houthi rebels claimed responsibility for Friday's attack on an India-bound oil tanker in the Red Sea.