Contents
In a dramatic turn of events, oil prices surged by almost 6% on Friday. Thus, marking Brent’s most significant weekly gain since February. This sharp increase came as Israel initiated ground raids within the Gaza Strip. Shifting from an air campaign to root out Hamas fighters following their recent deadly actions in southern Israel.
Brent Futures Lead the Way
Brent futures experienced a robust upswing of $4.89, amounting to a 5.7% increase, closing at $90.89 per barrel. Simultaneously, US West Texas Intermediate (WTI) crude witnessed a substantial gain of $4.78, or 5.8%, reaching $87.69 per barrel. Both benchmarks recorded their most substantial daily percentage gains since April. Brent’s weekly gain stood at an impressive 7.5%, the most significant increase since February, while WTI climbed by 5.9% for the week.
Assessing the Global Impact On Oil prices
The ongoing conflict in the Middle East has not significantly affected global oil and gas supplies, primarily due to Israel’s limited oil production. However, investors and market observers remain watchful, contemplating potential escalations and their consequences on supplies from neighboring countries in the world’s top oil-producing region.
Amid the turmoil, some Gaza residents fled their homes to escape Israel’s offensive, responding to an evacuation order given to over a million people in the northern half of the territory within 24 hours. Hamas, on the other hand, advised them to stay put.
Read More: Mexico Energy Secretary Resigns, Launches Veracruz Governorship Bid
Iran’s Oil Minister’s Assessment
Iran’s Oil Minister, Javad Owji, shared his views, anticipating oil prices to reach $100 per barrel. Attributing it to the current Middle East situation. His statement aligns with the perspective presented by the Ministry’s news agency, SHANA.
Furthermore, Iran’s Foreign Minister, Hossein Amirabdollahian, engaged in discussions concerning the Israeli-Hamas conflict with the leader of the Tehran-backed Lebanese armed group Hezbollah. This group has launched cross-border attacks on Israel, potentially adding further complexity to the situation.
Potential Impact on Iran’s Oil Supply
Should the United States intensify sanctions on Iran’s oil exports in response to its role in the conflict. Iran’s oil supply might face a considerable reduction.
Saudi Arabia has decided to postpone its U.S.-backed plans for normalizing ties with Israel, signaling a swift change in foreign policy priorities as the conflict escalates. This shift could potentially affect oil supply, as Saudi Arabia had previously expressed willingness to increase oil production in early 2023 to support the deal.
US Sanctions on Russian Oil
Additionally, the United States implemented its first sanctions on owners of tankers transporting Russian oil, exceeding the Group of Seven’s Oil prices cap of $60 per barrel. This move aims to close loopholes in the mechanism designed to penalize Russia for its invasion of Ukraine. Given Russia’s substantial role as the world’s second-largest oil producer and exporter, this intensified U.S. oversight of its shipments could lead to supply constraints.
Market Anticipation and OPEC’s Outlook
Oil market experts anticipate stricter U.S. sanctions on both Russia and Iran, potentially reducing supplies. As highlighted by Andrew Lipow, the president of Lipow Oil Associates.
The Organization of the Petroleum Exporting Countries (OPEC) has maintained its forecast for global oil demand growth this week. Thus, citing signs of a resilient world economy and expected demand increases in China, the world’s leading oil importer.
US Drillers Increase Activity
On the U.S. supply front, drillers witnessed a substantial rise in Oil prices this week, adding four oil rigs, marking the most significant weekly increase since March, according to Baker Hughes.
In the week ending October 10, money managers reduced their net long U.S. crude futures and options positions by 39,556 contracts to 240,204 during this period, as reported by the U.S. Commodity Futures Trading Commission (CFTC).
Do you need help in finding the best forex broker for your needs?
Click here: The Best Forex Broker Finder
Disclaimer: Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
