Brent inches up on apprehensions of Middle East conflict escalation
The front-month ICE Brent contract has inched $0.13/bbl higher on the day, to trade at $73.98/bbl at 09.00 GMT.
PHOTO: Brent crude price chart. Getty Images
Upward pressure:
Amid escalating tensions in the Middle East, market analysts remain concerned that Israel's potential retaliation against Iran could disrupt oil supply, driving up Brent futures.
The recent attack on Israeli Prime Minister Benjamin Netanyahu has further escalated tensions in the region, amplifying concerns over potential retaliation and disruptions to oil supply. As a result, market attention has shifted to Israel's next move, with analysts noting the increasing risks of supply chain instability in the Middle East.
"The Hezbollah drone that exploded next to Benjamin Netanyahu’s home has raised the stakes in the Israel-Hamas war...The latest moves threaten to spark an even fiercer response, raising the risk of oil supply disruptions in the region.” ANZ Bank's senior commodity strategist Daniel Hynes noted.
Downward pressure:
China reduced its benchmark lending rates on Monday, following last month’s cuts to other policy rates as part of a broader stimulus effort to revive the economy.
Despite these measures, China's economy grew by just 4.6% in the third quarter, its slowest growth since early 2023, according to official data cited by Reuters.
Oil demand growth in China is expected to remain weak in 2025, even with the recent stimulus, which has put downward pressure on Brent futures.
“The impact of the stimulus has not been as significant as some of the market observers have expected,” noted Fatih Birol, director of the International Energy Agency.
Meanwhile, the US Secretary of State Antony Blinken arrived in Israel on Tuesday and will visit other Middle Eastern countries this week to revive talks aimed at ending the Gaza conflict and easing tensions in Lebanon. The possibility of de-escalation has contributed to cap some of Brent's gains.
By Tuhin Roy
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