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Oil Falls as Bessent Seeks More US Output, Israel Nears Truce - BLOOMBERG

NOVEMBER 25, 2024

 

(Bloomberg) -- Oil declined as Treasury Secretary nominee Scott Bessent pushed for increased US production and Israel said it’s potentially days away from a cease-fire deal with Lebanon’s Hezbollah.

Brent crude fell below $75 a barrel after jumping almost 6% last week on increased geopolitical risks in Ukraine and Iran, with West Texas Intermediate near $71. Bessent advised President-elect Donald Trump to push for an extra 3 million barrels a day of oil or equivalent production, according to the Wall Street Journal. That compares with current US output of slightly more than 13 million barrels a day.

Further increases to US production threaten to worsen a glut seen from next year, just as OPEC is set to decide this weekend on whether to add extra barrels to the market. Crude has traded in a range of about $6 a barrel since the middle of October — alternating between weekly gains and losses — as the threat to supply from geopolitical tensions weighed against the prospects of oversupply. 

Iran last week said it will increase its nuclear fuel-making capacity after being censured by the UN’s International Atomic Energy Agency, as the OPEC producer braces for potential sanctions under a second Trump administration. That came as Russia’s war in Ukraine escalated with the use of longer-range missiles by both sides, raising concern that crude flows could be affected.

The Israeli ambassador to the US said on Monday that his nation is “close to a deal” with Hezbollah, although it remains unclear if the Iran-backed group will accept an accord. That may also reduce concerns about production from the Middle East, which supplies about a third of the world’s oil.  

Banks including Citigroup Inc. and JPMorgan Chase & Co. expect the Organization of the Petroleum Exporting Countries to delay a planned increase for a third time when they meet this weekend.

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