Oil Prices Decline 17% in Q3 Amid Global Demand Concerns and Middle East Tensions

Oil prices remained relatively steady on Monday but ended the third quarter with a 17% decline as concerns over waning global demand overshadowed fears of a supply disruption from Middle East tensions.

Brent crude futures for November delivery, which expired on Monday, fell 21 cents, settling at $92.20 per barrel. Meanwhile, the more actively traded December contract rose by 27 cents to close at $92.25. Brent prices saw a 9% drop in September — the largest monthly decrease since November 2022. For the third quarter, Brent slumped by 17%, its biggest quarterly loss in a year.

West Texas Intermediate (WTI) futures remained relatively unchanged, slipping by one cent to settle at $68.17. The U.S. benchmark saw a 7% decrease in September, marking the largest monthly decline since October 2022. For the quarter, WTI fell by 16%, the largest drop since Q3 of last year.

Geopolitical Tensions in the Middle East Add to Market Volatility

On Monday, oil prices found some support from speculation that Iran, a key OPEC producer, might become involved in the escalating Middle East conflict. Israel has intensified military operations against Hezbollah and Hamas leaders in Lebanon and has targeted Houthi positions in Yemen — all three groups are backed by Iran.

Economist Tim Snyder of Matador Economics noted that the market is assessing whether the conflict could expand, potentially affecting crude supply in the region.

China’s Economic Stimulus and Saudi Production Plans Weigh on Prices

China's recent fiscal stimulus measures to support the world's second-largest economy have had limited impact on oil prices, as traders remain skeptical about their potential to boost China's sluggish demand this year.

Moreover, prices were pressured by reports suggesting that Saudi Arabia, OPEC's de facto leader, is considering increasing oil production, effectively moving away from its unofficial target of $100 per barrel. Jim Ritterbusch, of energy consultancy Ritterbusch and Associates, indicated that Saudi Arabia’s plan to raise output in December could exert bearish pressure on the market in the coming weeks.

China’s Shrinking Manufacturing and Libyan Oil Production Recovery

Monday’s economic data revealed that China’s manufacturing sector contracted for the fifth month in a row, and the services sector sharply slowed in September, contributing to global demand concerns.

Additionally, the potential recovery in Libya's oil production weighed on the market. Libya's eastern-based parliament agreed to approve the nomination of a new central bank governor, a move that may help resolve political issues that have previously constrained the country's oil output.