Oil prices drop following disruption in US refining facilities
Shafaq News/ Oil prices experienced a significant drop on Thursday, with Brent crude futures falling by 68 cents or 0.8 percent to $89.80 per barrel.
US West Texas Intermediate futures declined by 91 cents or 1.1 percent, settling at $85.30 per barrel. This decrease came in the wake of a major disruption in refining facilities in the United States and ongoing concerns about inflation, dampening optimism regarding a potential US interest rate cut in the near term.
The disruption was primarily caused by power outages that halted several fuel production units at the massive Motiva Enterprises facility in Port Arthur, Texas. With a capacity of 626,600 barrels per day, the facility faced challenges restoring stability to the closed units due to the extended power outages, with estimates suggesting it could take up to 35 hours for operations to resume fully.
Extended shutdowns in refining units often result in weakened crude oil demand and increased inventory levels, impacting global oil markets. The situation highlights the vulnerability of oil supply chains to infrastructure disruptions and the ripple effects they can have on pricing dynamics.
The drop in oil prices also coincided with discussions within the US Federal Reserve, where officials expressed concerns about potential halts in inflation progress. This concern has prompted discussions about the need for an extended period of monetary tightening to address inflationary pressures in the world's largest economy.
Investors and analysts closely monitor global oil market developments, especially amid geopolitical tensions in the Middle East. The region is bracing for potential responses following recent events, including suspected Israeli airstrikes on Iranian interests in Syria.
Additionally, the International Energy Agency is set to release its monthly report, providing insights into the outlook for oil demand and supply dynamics.
