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Oil Prices Set to End Week Higher after US Rate Cut

The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo
The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo
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Oil Prices Set to End Week Higher after US Rate Cut

The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo
The US last week announced a 10-nation coalition to counter the attacks in the Red Sea. - File Photo

Oil prices eased on Friday, but were on track to register gains for a second straight week following a large cut in US interest rates and declining global stockpiles, Reuters reported.

Brent futures were down 50 cents, or 0.67%, at $74.38 a barrel at 1004 GMT while US WTI crude futures fell 48 cents, or 0.65%, at $71.47.

Still, both benchmarks were up 3.7% and 4% respectively on the week.

Prices have been recovering after Brent fell below $69 for the first time in nearly three years on Sept. 10.

"US interest cuts have supported risk sentiment, weakened the dollar and supported crude this week," UBS analyst Giovanni Staunovo said.

"However, it takes time until rate cuts support economic activity and oil demand growth," he added, regarding crude's more muted performance so far on Friday.

Prices rose more than 1% on Thursday following the US central bank's decision to cut interest rates by half a percentage point on Wednesday.

Interest rate cuts typically boost economic activity and energy demand, but some also see it as a sign of a weak US labor market.

The Fed also projected a further half-point rate cut by year-end, a full point next year and a half-point trim in 2026.

"Easing monetary policy helped reinforce expectations that the US economy will avoid a downturn," ANZ Research analysts said.

Also supporting prices were a decline in US crude inventories, which fell to a one-year low last week.

A counter-seasonal oil market deficit of around 400,000 barrels per day (bpd) will support Brent crude prices in the $70 to $75 a barrel range during the next quarter, Citi analysts said on Thursday, but added prices could plunge in 2025.

Crude prices were also being supported by rising tensions in the Middle East. Walkie-talkies used by Lebanese armed group Hezbollah exploded on Wednesday following similar explosions of pagers the previous day.

Security sources have said the Israeli spy agency Mossad was responsible, but Israeli officials have not commented on the attacks.

China's slowing economy also weighed on market sentiment, with refinery output in China slowing for a fifth month in August and industrial output growth hitting a five-month low.

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BP Nears Deals for Oil Fields, Curbs on Gas Flaring in Iraq

British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
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BP Nears Deals for Oil Fields, Curbs on Gas Flaring in Iraq

British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)

Iraq and British oil giant BP are set to finalize a deal by early February to develop four oil fields in Kirkuk and curb gas flaring, Iraqi authorities announced Wednesday.

The mega-project in northern Iraq will include plans to recover flared gas to boost the country's electricity production, they said.

Gas flaring refers to the polluting practice of burning off excess gas during oil drilling. It is cheaper than capturing the associated gas.

The Iraqi government and BP signed a new memorandum of understanding in London late Tuesday, as Prime Minister Mohammed Shia al-Sudani and other senior ministers visit Britain to seal various trade and investment deals.

"The objective is to enhance production and achieve optimal targeted rates of oil and gas output," Sudani's office said in a statement.

Iraq's Oil Minister Hayan Abdel Ghani told AFP after the new accord was signed that the project would increase the four oil fields' production to up to 500,000 barrels per day from about 350,000 bpd.

"The agreement commits both parties to sign a contract in the first week of February," he said.

Ghani noted the project will also target gas flaring.

Iraq has the third highest global rate of gas flaring, after Russia and Iran, having flared about 18 billion cubic meters of gas in 2023, according to the World Bank.

The Iraqi government has made eliminating the practice one of its priorities, with plans to curb 80 percent of flared gas by 2026 and to eliminate releases by 2028.

"It's not just a question of investing and increasing oil production... but also gas exploitation. We can no longer tolerate gas flaring, whatever the quantity," Ghani added.

"We need this gas, which Iraq currently imports from neighboring Iran. The government is making serious efforts to put an end to these imports."

Iraq is ultra-dependent on Iranian gas, which covers almost a third of Iraq's energy needs.

However, Teheran regularly cuts off its supply, exacerbating the power shortages that punctuate the daily lives of 45 million Iraqis.

BP is one of the biggest foreign players in Iraq's oil sector, with a history of producing oil in the country dating back to the 1920s when it was still under British mandate.

According to the World Bank, Iraq has 145 billion barrels of proven oil reserves -- among the largest in the world -- amounting to 96 years' worth of production at the current rate.