WTI price holds around $75.50 on rising oil supply fears

• The WTI price tends to advance due to growing supply concerns in the Middle East.
• Libya’s oil exports have been halted at several ports due to a standoff between rival political factions.
• Iraq plans to cut its oil production to between 3.85 and 3.9 million barrels per day starting next month.

The price of West Texas Intermediate (WTI) oil continues to rise, trading around $75.50 a barrel during the Asian session on Friday. This increase is driven by supply concerns in the Middle East. Concerns about low Libyan oil reserves and Iraq’s plans to cut production are contributing to these supply fears, which in turn are supporting oil prices.

On Thursday, more than half of Libya’s oil production, about 700,000 barrels per day (bpd), was offline and exports were suspended at several ports due to a standoff between rival political factions. According to Rapidan Energy Group, as reported by Reuters, production losses in Libya could escalate to between 900,000 and 1 million bpd and persist for several weeks.

In addition, Iraq’s oil reserves are expected to decline as the country has exceeded its quota set by the Organization of the Petroleum Exporting Countries (OPEC) and its allies. According to a source with direct knowledge, Iraq plans to cut its oil production to between 3.85 million and 3.9 million barrels per day (bpd) starting next month, Reuters reported on Thursday.

However, the rise in WTI prices could be limited by weakened global demand for crude oil. Lingering concerns about the economy of China, the world’s largest oil importer, continue to dampen oil demand. On the other hand, the US economy recorded modest growth, which positively affected investor confidence. In the second quarter, US Gross Domestic Product (GDP) grew at an annualized rate of 3.0%, beating both the forecast and the previous growth rate of 2.8%.

WTI prices could find support from the increasing likelihood of an interest rate cut by the Federal Reserve starting in September. On Thursday, Atlanta Federal Reserve President Raphael Bostic, known for his dovish stance at the Federal Open Market Committee (FOMC), suggested it might be “time to move” on cutting interest rates. This indication comes in response to further falling inflation and a higher than expected unemployment rate.