Oil prices experienced a decline in the early hours of Wednesday following the conclusion of the COP28 climate talks in Dubai. During the conference, participating nations made the unprecedented decision to reduce their reliance on fossil fuels such as oil, coal, and natural gas. Although some countries were hoping for a definitive timeline for this transition and a complete phase-out of fossil fuels, the commitment to actively decrease oil and gas usage itself marks a significant milestone. It signifies a shift in focus from merely reducing emissions or increasing renewable energy to actively curbing the utilization of these non-renewable resources.
The West Texas Intermediate, which serves as the benchmark for the United States, witnessed a 0.9% dip, settling at $68 per barrel. Similarly, Brent crude, the global standard, experienced a 0.9% decline, reaching $72.62 per barrel. Both of these figures signify a recent drop to six-month lows.
Aside from the effects of the COP28 talks, oil prices were also influenced by U.S. inflation figures in anticipation of an interest rate decision by the Federal Reserve. The data released reduced speculation of early rate cuts in the upcoming year, ultimately dampening energy demand.
In a separate development, the Energy Information Administration revised downwards its forecast for oil prices in the following year, despite the recent agreement of the Organization of the Petroleum Exporting Countries to extend output cuts.