Oil continues its third day on the rise due to fear of a rebound in supply difficulties from the Middle East, while they continue the bombings in Beirut and an escalation of war is expected between Israel and Iran. The barrel of Brent oil, a benchmark in Europe, has soared 4% to touch $77 following comments by the President of the United States, Joe Biden, acknowledging that he is studying with Israel possible attacks on Iranian oil facilities. “We are debating about that,” he said in statements collected by the news agency. Bloomberg.
The reference crude oil in the Old Continents is heading for its highest price since the end of August. In the last four days, crude oil has gained almost 7%, which positions it as the largest weekly increase since February, when geopolitical tensions also sent the price of black gold above $82. For its part, a barrel of West Texas Intermediate, the main variety in the US, exceeds $73 and registers an increase of 5.5%.
The region accounts for about a third of global crude supply, and the market is concerned that the latest escalation could affect flows if energy facilities are attacked or supply routes are blocked. Iran is the seventh largest producer of crude oil in the world, with a production of 3.2 million barrels per day, which represents 4% of the total global supply.
Fear in the market
The market’s concern is that if Israel attacks Iran’s key assets, the Islamic Republic will escalate the conflict and involve more oil-producing countries and paralyze global energy shipments. An Israeli attack on Iran’s export machinery could take 1.5 million barrels a day off the market, according to a recent Citi report. Even an attack considered ‘minor’ could wipe out between 300,000 and 450,000 barrels of production, the US bank team said.
Other analysts point the focus to the reasons that are moderating the rise. “The cooling of the rebound in prices is somewhat surprising, given the increased risk faced by the oil market,” points out the ING analysis team and highlights that the price of a barrel is trading 16% below last year’s level, when It was over $87. From the entity of Dutch origin they highlight that, without a doubt, an attack on the Iranian nuclear facilities (a possibility that even the United States considers possible) could dispel the market’s doubts and skyrocket prices.
A similar view is offered by the Irish broker Interactive Brokers. For Steve Sosnick, the firm’s chief strategist, the price movement is “slightly upward, but in no way alarming.”
Much of the price containment is due to the decision of large producers. The OPEC+ oil cartel, led by Saudi Arabia and Russia, decided this Wednesday on new production increases, scheduled to start in December, in what the market interprets as an end to its objective of taking the barrel to $100. In the United States, official data also shows that crude oil stockpiles unexpectedly rose by 3.9 million barrels last week, marking their biggest increase in about five months.
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