Oil prices rose on Thursday as investors worried that a worsening conflict in the Middle East could disrupt crude flows from the region, although prospects for greater global supply kept gains in check.
Brent crude futures rose $1.41, or 1.91 percent, to $75.31 a barrel. U.S. West Texas Intermediate crude added $1.45, or 2.07 percent, to $71.55.
Markets fear that Israel will attack Iranian oil infrastructure, which could provoke retaliation from Iran. There are concerns that this escalation could lead Iran to block the Strait of Hormuz or attack Saudi infrastructure, as it did in 2019, said Ashley Kelty, an analyst at Panmure Gordon.
The strait is a key logistical chokepoint through which a fifth of daily oil supplies pass.
Israel bombed Beirut early Thursday, killing at least six people, after its forces suffered their deadliest day on the Lebanese front in a year of clashes with Hezbollah, an armed group backed by Iran. Israeli Prime Minister Benjamin Netanyahu said Iran would pay for its missile attack on Israel on Tuesday, while Tehran said any retaliation would be met with “vast destruction”, raising fears of a wider war. “From here, it’s a waiting game to see what the Israeli response will be and I suspect it will come after the conclusion of the Rosh Hashanah holiday tomorrow,” said IG market analyst Tony Sycamore, referring to the Jewish New Year. . “We could see oil prices plummet and the geopolitical premium built up in prices fade, if Israel decides to press its advantage against Hezbollah in southern Lebanon rather than retaliating directly on Iranian soil or assets,” said Harry Tchilinguirian , head of research at Onyx Capital Group. Meanwhile, U.S. crude inventories rose by 3.9 million barrels to 417 million in the week ended Sept. 27, the Energy Information Administration (EIA) said, compared with survey expectations. Reuters of a decrease of 1.3 million barrels. “The rise in US inventories demonstrates that the market is well supplied and can withstand any disruption,” ANZ analysts said in a note. Fears have been tempered by OPEC’s oil production capacity and the fact that global crude supplies have not yet been disrupted by unrest in the main producing region. OPEC has enough reserve capacity to offset a complete loss of Iranian supply if Israel takes that country’s facilities offline.
#Crude #oil #rises #fears #Middle #East #supplies