Crude oil prices have become quite the roller coaster of late. Early Thursday, they steadied after rising more than 1% on Thursday, courtesy of news about shutdowns in Libya’s oil production. But even with this news, experts think that over the month, oil prices may fall on worries of weak demand.

What Happened with Libya?

Libya also plays an important role in the world of oil and faced some serious problems that seriously hit its oil production: according to a report by Reuters, in July, Libya pumped about 1.2 million barrels a day. By the end of August, however, it had fallen to less than 600,000 barrels daily. That’s a big drop, and it’s making waves in the oil market.

What About Other Oil Producing Countries?

It’s not just Libya that’s causing a stir. Iraq might also cut back on its oil output starting this September. That would be because Iraq needs to adjust the production pegged to meet the limits set by the OPEC+ agreement-a group of countries which work as a team to keep the production and price of oil in check.

Why Are Prices Still Falling?

Despite such developments, oil prices might still fall this month. This is because of the prevalent fears over future oil demand. While the Asian imports of oil are higher in August as compared to July, suggesting perhaps demand is rebounding, the larger picture still looks pretty grim.

Recently, two of Wall Street’s largest financial companies have been revising their estimates of the price of oil. Goldman Sachs reduced its price estimate for Brent crude, a benchmark type of oil, to a range of $70 to $85 per barrel. The revision in the forecast is due to the anticipation of weaker demand from China, more oil produced by U.S. shale, in addition to high supplies of the commodity worldwide. However, the decline in global oil supplies during the first half of the year was not sufficient enough to alter the overall picture.

Morgan Stanley has also revised its forecast for the price of oil for similar reasons as Goldman Sachs. Neither of them expected such a huge drop in the case of Libya’s production, which would have otherwise seen the prices go up. With so many factors at play, though, it’s hard to say precisely which way the prices will go.

What does the future hold for OPEC?

But all these changes are closely being watched by oil-producing countries under the OPEC banner, which has been trimming oil production to stabilize prices in the market. However, if the prices continue to tumble and demand does not improve, cuts would have to be extended for more time. According to analysts at ANZ, OPEC might have to delay ending cuts if it actually wants to see higher prices.

In any case, amidst all the drama between Libya and other oil producers, oil prices are still under some pressure. The big concern, however, is future demand and till the outlook for that improves, prices may probably continue to struggle. Oil markets seem so confusing in this period of many changes and uncertainties. For now, oil prices will therefore probably be on a bumpy ride.

Key Points to Remember:

Libya’s Oil Production Fall: Oil production in Libya fell from 1.2 million barrels a day to less than 600,000.
Iraq’s Production Cuts: Iraq too may join the ranks of cutting oil production from September onwards.
Demand Concerns: Apprehensions of lower demand in the latter part of the year are weighing on the price.
Forecast Changes: Goldman Sachs and Morgan Stanley have cut their estimates of the oil price.
OPEC’s Contribution: OPEC may well be forced to continue its oil production cuts if demand remains soft.
So, as big of an issue Libya’s oil troubles might sound, the greater oil market still has to deal with bigger issues such as demand and global oil supplies. There’s still uncertainty over where oil prices head in the future, and we may see more ups and downs before things settle down.