Middle East Oil Producers on Edge Amid Poor Economic Outlook

Oil producers in the Middle East are nervously watching economic developments around the world amidst fears of a possible recession in some advanced economies, which threatens to sharply cut demand for hydrocarbons.

For now, there is a slight uptick in prices due to a number of crude oil and natural gas production platforms in the Gulf of Mexico being shut down due to Hurricane Francine. This production is expected to come back online in the coming weeks, which will put upward pressure on global supply and downward pressure on prices.

“This historic speculative selling pressure prompted a more than $10/bbl collapse in crude prices between late August and this past Tuesday,” Commodity Context analyst Rory Johnston wrote in a note quoted by Reuters.

However, economic data from some of the world's largest economies, including China, Europe and even the US, are prompting analysts to warn of a downturn and possibly even a recession. This is prompting suppliers in the Middle East and elsewhere to consider shutting down production platforms in order to cut supply and maintain prices, which have already declined 14% since the start of the third quarter.