In a response to escalating tensions in the Middle East due to the ongoing Israel-Hamas conflict, oil prices experienced a notable rise on Friday. U.S. Secretary of State Antony Blinken’s impending visit to the region added a layer of uncertainty, prompting market reactions.
As of 12:27 CST (1642 GMT), Brent crude futures marked a rise of $1.14, equivalent to 1.47%, reaching $78.73 per barrel. Concurrently, U.S. West Texas Intermediate crude futures recorded a $1.57 increase, reflecting a 2.17% surge, settling at $73.76.
This rise in oil prices comes after a tumultuous week marked by substantial losses on Thursday. The setback was triggered by significant increases in U.S. gasoline and distillate stocks. The market’s response to geopolitical events in the Middle East contributed to the upward trajectory of oil prices during Friday’s trading session.
John Kilduff, a partner with Again Capital LLC, commented on the situation, stating, “With the tensions in the Middle East, the geopolitical trading premium has to get pushed higher. It’s hard for traders to fight the headlines.”
The impact of the conflict reached beyond the oil market, affecting global shipping. Maersk (MAERSKb.CO), a prominent shipping company, announced a precautionary measure by diverting all vessels away from the Red Sea for the foreseeable future. The company issued warnings to customers about potential disruptions, highlighting the broader repercussions of regional tensions.
In tandem with these developments, Bank of America took a defensive stance in a research note issued on Friday. The note indicated a cautious approach towards oil stocks, citing concerns related to the long-term price forecast for oil. According to the bank’s analysis, the expected trading range for Brent crude, between $70 and $90 per barrel, is anticipated to persist, thanks to OPEC+ interventions. However, the note emphasized the potential risk of a permanently backward oil curve, exacerbated by spare capacity acting as a headwind for the sector’s value.
These economic shifts demonstrate the intricate interplay between geopolitical events and global markets. As Secretary Blinken prepares for his visit to the Middle East, the world watches closely, aware of the far-reaching consequences that such diplomatic efforts may have on various sectors, including the volatile oil market.
Source: Reuters
