Oil prices experienced a notable upswing on Friday due to growing apprehensions among investors regarding potential supply disruptions in the Middle East., with Brent crude futures surging by a dollar per barrel, marking a 1.1% increase and settling at $93.26 a barrel. Similarly, U.S. West Texas Intermediate crude rose by a dollar, landing at $90.37 a barrel. The December WTI contract, actively traded, also saw an uptick, climbing 90 cents to reach $89.27 a barrel.
The deepening crisis between Israel and Palestine has raised concerns about the stability of oil supplies from the region. U.S. Defense Minister Yoav Gallant’s announcement of potential troop deployment into the Palestinian enclave, coupled with reports of intercepted missiles originating from Yemen towards Israel, have heightened fears of a broader regional conflict that could severely impact oil production.
John Kilduff, a partner at Again Capital based in New York, emphasized the pressing nature of these concerns, asserting that the market cannot afford to dismiss the possibility of supply interruptions, particularly in the upcoming days when trading activity is anticipated to be limited.
Contributing to these apprehensions are the recent decisions by leading oil producers. Both Saudi Arabia and Russia have extended their supply cuts through year-end, bolstering expectations of reduced availability. In contrast, the United States has witnessed a decline in crude inventory over the past few weeks.
Additionally, the U.S. government’s strategy to replenish the Strategic Petroleum Reserve offers a glimmer of hope, albeit with tempered expectations. Industry experts predict limited success with the proposed investment of $79 per barrel.
Despite the temporary easing of oil sanctions on Venezuela, experts do not foresee substantial alterations to the policies of OPEC+ producers. The gradual pace of production recovery in Venezuela indicates that it is unlikely to emerge as a significant player in the global oil balance in the immediate future. Tamas Varga of oil brokerage firm PVM underscored this sentiment.
Looking ahead, it is anticipated that the dynamics of Middle East supply disruptions and the gradual resurgence of Venezuelan oil will serve as the primary catalysts influencing oil prices in the weeks to come.
Source: Reuters
