Brent gains amid intensifying conflict in the Middle East

The front-month ICE Brent contract has surged $3.85/bbl on the day, to trade at $93.66/bbl at 09.00 GMT.

PHOTO: Oil pump jacks in the desert of Bahrain, Middle East. Getty Images

Upward pressure:

Rising tension in the Middle East has taken center stage once again, igniting fears about supply disruption in the global oil market after protests broke out in Lebanon, Iraq, Turkey, Iran, and Jordan in response to the fatal missile attack on the Al-Ahli Baptist Hospital located in Central Gaza. More than 500 civilians got killed in the attack on Tuesday.

Iran’s government blamed Israel for the hospital bombing and urged Arab countries to put an oil embargo on Israel.

Meanwhile, oil analysts are speculating that the US government might put tighter sanctions on Iran if proven that the Iranian government funded Hamas and helped the militant group to plan the attack on Israel.

“There is bipartisan pressure to shut down Iranian oil exports,” said Price Futures Group’s senior market analyst Phil Flynn. “That may be why Iran desperately called for an oil embargo because they know the world may soon shut them down,” he further added.

Downward pressure:

Meanwhile, Iran’s request for an immediate oil embargo was turned down by top oil producers group OPEC and its allies (OPEC+). Chances of OPEC acting on the call for oil embargo is scarce, analysts said.

Additionally, the US Department of State lifted partial sanctions on Venezuelan oil yesterday, after the country’s government and opposition decided to host presidential elections in Venezuela in 2024.

“The market is reacting sharply to the news that the Venezuelan oil exports have been lifted,” Flynn said. “It’s a good thing if you want to help fix the global tightness of diesel supply,” he further added.

By Aparupa Mazumder

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