Shafaq News / The prices of Basra Heavy and Basra Intermediate crude oils declined on Wednesday as global oil prices continue to drop.

The price of Basra Heavy dropped by 97 cents to reach $77.96, while Basra Intermediate rose by $1.20 to reach $80.96.

According to Reuters, Manufacturing activity in China, the world's second-largest economy and oil consumer, contracted for a fourth straight month in January, an official factory survey showed on Wednesday, suggesting economic momentum was flagging at the start of 2024.

Forecasts from several analysts, including from the Organization of the Petroleum Exporting Countries (OPEC), see oil demand growth in 2024 driven primarily by Chinese consumption and signs of a slowing economy there undercut those outlooks.

However, both oil benchmarks are set to rise this month as the Israel-Hamas war has expanded to a naval conflict in the Red Sea between the US and Iran-aligned Houthi militants that has disrupted oil and natural gas tanker shipping routes and added to delivery costs. Other Iranian militant groups in the region have also struck US forces in Iraq, Syria and Jordan.

Both Brent and WTI are set to rise over 7% in January. Still, the widening Middle East conflicts have not halted actual output and the concerns about lower oil demand growth have mitigated the gains from the geopolitical concerns.

"The main issue with turning outright bullish on crude oil here is the technical picture remains bearish and is yet to catch up with recent events," including a deadly drone attack on US troops near the Jordan-Syria border last week, said Tony Sycamore, a market analyst with IG.

US President Joe Biden said he had decided how to respond to the attack without giving further details, but added that he wanted to avoid a wider war in the Middle East.

In the Israel-Palestinian conflict, Hamas said on Tuesday it had received and was studying a proposal for a ceasefire to the fighting in Gaza. It appeared to be the most serious peace initiative since the war's first and only brief ceasefire which fell apart in November.

However, Sycamore said the market was concerned that a Gaza ceasefire would not necessarily halt the Houthi's attacks in the Red Sea.