Brent rises as geopolitical risks continue to spark oil supply concerns
The front-month ICE Brent contract has risen $1.41/bbl higher on the day, to trade at $75.39/bbl at 09.00 GMT.
PHOTO: Getty Images
Upward pressure:
The conflict in the Middle East has intensified, with Israel’s military campaign in Lebanon showing no signs of easing. Israel is reportedly considering a significant retaliatory strike against Iran following a Hezbollah drone attack that nearly hit Israeli Prime Minister Benjamin Netanyahu’s residence on Saturday.
On Tuesday, Israel confirmed the killing of Hashem Safieddine, the successor to late Hezbollah leader Hassan Nasrallah, who was killed in an Israeli attack last month targeting the Iran-backed militant group, according to Reuters.
The ongoing conflict has raised concerns about potential supply disruptions in the Middle East, keeping market analysts on edge and supporting Brent futures.
“Crude oil prices pushed higher as traders continue to fret over possible supply disruptions in the Middle East,” ANZ Bank's senior commodity strategist Daniel Hynes noted.
The absence of any significant outcome from US Secretary of State Antony Blinken's latest visit to Israel has also contributed to supporting Brent futures. Blinken's Middle East tour is aimed at de-escalating the conflict in the region.
The strength in Brent futures “was in response to the lack of any outcome from US Secretary of State, Antony Blinken’s, latest visit to Israel,” two analysts from ING Bank commented.
“On top of this, the market continues to wait for Israel’s response to Iran’s missile attack,” they further added.
Downward pressure:
Crude oil inventories in the US rose by 1.64 million bbls in the week that ended 18 October, according to the American Petroleum Institute (API) estimates cited by Trading Economics.
This rise in US crude stocks suggests a decline in oil demand, which in turn could limit limiting Brent’s gains.
“The American Petroleum Institute’s latest weekly US oil stocks data was also likely exerting some downward pressure on crude early Wednesday,” VANDA Insights’ founder and analyst Vandana Hari remarked.
By Tuhin Roy
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