Oil prices experienced a notable uptick on Friday, with fears of potential supply disruptions in the Middle East intensifying due to escalating tensions in the Israel-Palestinians crisis. Brent crude futures saw a significant rise of $1.00, or 1.1%, settling at $93.26 per barrel. Simultaneously, U.S. West Texas Intermediate crude witnessed a similar increase, reaching $90.37 per barrel. The more active December WTI contract also surged, gaining 90 cents to reach $89.27 per barrel.
The surge in oil prices follows US Defence Minister Yoav Gallant’s announcement of potential troop deployment into the Palestinian enclave. Additionally, reports of intercepted missiles launched from Yemen towards Israel have heightened concerns of a broader regional conflict, potentially disrupting oil supplies.
Market analysts, including John Kilduff, a partner at Again Capital in New York, emphasized the critical need for vigilance regarding potential supply disruptions, particularly in the forthcoming days with halted trading. The extended commitment to supply cuts until year-end by major producers Saudi Arabia and Russia, coupled with a recent decline in U.S. crude inventory, further reinforced concerns of potential shortages.
In an effort to mitigate potential supply constraints, Washington’s plan to replenish the U.S. Strategic Petroleum Reserve offers a glimmer of hope. However, industry experts caution that the investment bid of $79 per barrel is anticipated to yield only limited success.
Despite the temporary lifting of oil sanctions on Venezuela, industry insiders remain skeptical about any substantial shifts in OPEC+ producer policy. The anticipated gradual process of production recovery in Venezuela is not expected to significantly impact the global oil balance in the foreseeable future, according to Tamas Varga, an oil broker at PVM.
Looking ahead, the primary drivers of movements in oil prices in the coming weeks are anticipated to be the continued uncertainties surrounding Middle East supply disruptions and the gradual recuperation of Venezuelan oil production.
Source: Reuters
