Oil prices dropped to a near two-month low on Tuesday. This decline resulted from a lack of immediate escalation in Middle East tensions, prompting traders to remove the risk premium from prices.
Market sentiment was also affected by caution ahead of an upcoming meeting of the Organization of Petroleum Exporting Countries (OPEC). Despite this, the recent drop in crude oil prices is expected to lead the cartel to downplay any plans to reduce production cuts.
The anticipation of key central bank meetings this week, including the Federal Reserve, kept oil prices subdued. Ongoing concerns over slowing demand, particularly in top importer China, further dampened market sentiment.
Brent oil futures for September delivery fell 0.2 percent to $79.63 per barrel. West Texas Intermediate (WTI) crude futures decreased by 0.3 percent to $75.62 per barrel by 21:27 ET (01:27 GMT).
Looking ahead, the Joint Ministerial Monitoring Committee of OPEC will meet on August 1. Reports indicate the meeting will be routine and unlikely to bring significant changes to production plans. Analysts suggest that the recent weakness in crude prices could lead major producers like Russia and Saudi Arabia to downplay plans to increase production later this year, contrary to earlier forecasts for 2024.
Oil prices were also pressured by a strengthening U.S. dollar, which rebounded on Monday in anticipation of the Federal Reserve meeting this week. While the Fed is expected to keep interest rates steady, any signals regarding future rate cuts will be closely watched by the market.