Oil prices fall to multi-month lows as Libya signs to end dispute and resume production By Investing.com

Investing.com — Oil prices fell to eight-month lows on Tuesday, as a potential end to a dispute in Libya that has disrupted output and worries about a potential OPEC+ production increase later weighed on sentiment.

At 14:18 EST (18:18 GMT), futures were down 4.6 percent at $70.20 a barrel, while the contract was down 5 percent at $73.66 a barrel.

The Libyan dispute is coming to an end

Libya’s central bank governor, Sadiq al-Kabir, said a deal between rival factions in Libya appeared imminent to end the dispute that would trigger the country’s return to oil production, Bloomberg reported on Tuesday.

Libya’s crude oil production has been halted due to a disagreement between rival political factions over control of the country’s central bank and oil revenues. The disagreement saw production fall to about 591,000 barrels per day on August 26, according to Libya’s National Oil Corp, well below the 1.28 million barrels per day seen on July 20.

Expectations for a deal by the end, despite this, come after the United Nations Support Mission in Libya helped negotiate in Tripoli between the rival factions and said a “significant” deal had been reached.

China concerns continue to weigh on the demand outlook

In addition to supply concerns, worries about weakness in China-led crude oil demand also weighed on sentiment, following other signs that Beijing is struggling to boost economic growth.

“Weekend data from China was weak,” Scotiabank said in a recent note, citing weaker economic data, including China’s composite PMI released on Friday.

The outlook for global demand is coming into further focus as the US summer driving season, a boon for crude oil demand, is now in the rearview mirror.

OPEC+ production taper affairs

Concerns about the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, losing production curbs starting in October continue to worry oil bulls.

But RBC believes, however, that the oil group could decide to extend current output cuts until the end of the year amid “revival demand concerns”, particularly from China.

“While the APAC region should have borne most of the growth this year, China’s underperformance has hurt growth forecasts for 2024 and continued to lag behind both crude oil imports and refinery output level from 2023,” RBC said in a recent note.