![\"\"\/](\"https:\/\/mettisglobal.news\/wp-content\/uploads\/2024\/09\/ChartIQImage638613270928520449992471664.png\")
<\/figure>\n\n\n\nNotably, this was the third consecutive weekly drop in oil prices arising from weak demand signals from China, the world’s biggest oil importer.<\/p>\n\n\n\n
Initially, the week commenced in a bright zone for the commodity as supply concerns from halted Oil exports at major Libyan ports supported prices.<\/p>\n\n\n\n
However, the gains soon took a reversal on potential signals of a deal to resolve the dispute, which eased concerns about oil exports from Libya.<\/p>\n\n\n\n
This became a major loss for oil futures as eased supply disputes triggered a massive sell-off of the commodity, dragging it to lows.<\/p>\n\n\n\n
Following this news, OPEC+ considered delaying a potential increase in oil output to counterbalance Libya’s production rise, in the hope of supporting prices.<\/p>\n\n\n\n
Nonetheless, another setback emerged as economic data from the U.S. revealed that manufacturing had contracted, adding to demand concerns with China.<\/p>\n\n\n\n
Markets took a further hit after U.S. jobs data clocked in weaker than expected in August, implicating that the economy is on a slide.<\/p>\n\n\n\n
However, the signals were not entirely negative as on the other side jobless rate fell to 4.2% and average hourly earnings rose.<\/p>\n\n\n\n
As demand fears from the previous week intensified and supply tensions eased in Libya, the situation worsened, leading to a sharp decline in oil prices.<\/p>\n\n\n\n
Impact on Domestic Prices<\/strong><\/p>\n\n\n\n Fuel prices in Pakistan are determined on a fortnight basis based on international prices. Based on the data from the first week, it appears that the government is likely to cut prices for the second half of September.<\/p>\n\n\n\n This potential cut would make the fourth consecutive reduction in fuel prices.<\/p>\n\n\n\n Furthermore, since the petroleum import bill constitutes the dominant portion of Pakistan’s total imports (28.5% in FY24<\/a>), a reduction in the import bill from lower international prices could ease the negative trade balance and reduce pressure on the country’s limited dollar reserves.<\/p>\n\n\n\n However, it is crucial to mention that nearly half a period is left for the next petrol price determination, so this cut is subject to further volatility in oil prices and exchange rates.<\/p>\n\n\n\n Moreover, the U.S. Fed Reserve will meet on September 17\/18 and is likely to cut interest rates, which tends to be much-awaited and bullish for the commodity.<\/p>\n\n\n\n