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Brent Crude Prices Near Five-Month High Due to Middle East Tensions
Confirmed
In Short: Analysts at ING noted that oil prices remain well-supported, suggesting the market is pricing in a significant risk premium due to the situation's volatility.
Brent crude futures climbed 55 cents, or 0.50%, to $110.10 a barrel by 0319 GMT, after rising as high as $110.70 a barrel in the previous session to their highest since May 20, according to ASHARQ AL-AWSAT English and Arabnews (Saudi Arabia).
The more-active December contract rose 39 cents, or 0.40 percent, to $98.93, as reported by Arabnews (Saudi Arabia).
Analysts at ING noted that oil prices remain well-supported, suggesting the market is pricing in a significant risk premium due to the situation's volatility.
According to the International Energy Agency, Russia's crude oil production increased by 65,000 barrels per day in September to 8.43 million bpd, but remained about 870,000 bpd below that of a year ago.
The US West Texas Intermediate crude (WTI) contract for November delivery, set to expire on Tuesday, was up 0.24% to $103.91, as per ASHARQ AL-AWSAT English and Arabnews (Saudi Arabia).
Tim Waterer, KCM Trade chief analyst, said, “While the prospect of additional Russian diesel supply offers some theoretical relief, traders appear far more focused on the ongoing risk of further damage to energy infrastructure across the Gulf region.”
At least 18 vessels were reportedly attacked over two weeks, which keeps the risk premium intact, according to ship-tracker Kpler.
Kyle Rodda, senior financial market analyst at Capital.com, noted, “Some of the geopolitical issues that have flared up in the Middle East are putting upward pressure on oil and as a result that has kind of weighed on gold to kick off the week.”
The US West Texas Intermediate crude (WTI) contract for November delivery, set to expire on Tuesday, was up 0.24% to $103.91, as per ASHARQ AL-AWSAT English and Arabnews (Saudi Arabia).
A global shortage of fuel oil used by ships and power plants is looming in the third quarter as war-related disruptions constrain supplies, with a deficit forecast at 218,000 barrels per day, as reported by Profit (Pakistan).
The OPEC+ cartel has agreed to keep oil production targets steady for November amid the uncertainty created by the continuing Middle East conflict, as announced in a meeting held on Sunday.
AUD/USD consolidated in the Asian session on Thursday, trading just above 0.6950 as traders assessed developments in the Middle East crisis, according to Fxstreet.
What this adds
The geopolitical tensions in the Middle East continue to influence oil prices, with traders closely monitoring the situation for further developments.
What's confirmed
- "Oil prices remain well-supported... This suggests the market is pricing in a significant risk premium, given the situation's volatility," ING analysts said in a note on Tuesday.
- Russia's crude oil production increased by 65,000 barrels per day in September to 8.43 million bpd, but remained about 870,000 bpd below that of a year ago, the International Energy Agency said last week.
- The US West Texas Intermediate crude (WTI) contract for November delivery, set to expire on Tuesday, was up 0.24% to $103.91.
- "While the prospect of additional Russian diesel supply offers some theoretical relief, traders appear far more focused on the ongoing risk of further damage to energy infrastructure across the Gulf region," said Tim Waterer, KCM Trade chief analyst.
- "However, if flows continue uninhibited despite the geopolitical environment, the risk premium would likely erode slowly. Clearly, there are no signs of this yet."
- In the US, crude oil stockpiles were expected to have fallen last week along with product inventories, a preliminary Reuters poll showed on Monday.
- Brent Crude Holds Near Five-Month High on Middle East Tension Oil prices advanced on Tuesday, with Brent hovering around a five-month high as traders priced in a geopolitical risk premium from Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.
- At least 18 vessels were reportedly attacked over two weeks, which keeps the risk premium intact, ship-tracker Kpler said in a note on Monday.
What's still developing
- Elsewhere, Bank of Japan Governor Kazuo Ueda said underlying inflation is "quite close" to the central bank's 2% target, with strong global AI demand adding to inflationary pressure from a tight job market, signaling scope for further rate increases.
- The bank said only 23 percent of people in low-income countries used the Internet, a stark contrast against 94 percent in high-income countries.
- "The interesting dynamic is that there's going to be a big move, no matter what the Fed does, and the initial reaction... might be supportive of gold if they keep interest rates unchanged," Rodda said.
- "Digital technology can help countries create jobs and make scarce resources go further," said World Bank President Ajay Banga.
- Asian LNG Prices Surge Past $30 as Middle East Shipping Risks Escalate What I Cover Irina Slav has been writing about global energy markets since 2007, covering the oil and gas industry, energy security, commodities, and the… During the first three months or so of the U.S. and Israeli war with Iran, the dominant mood on oil markets was that the conflict would end any day now.
- Barack Obama announced a “pivot to Asia,” only to be drawn into the aftermath of the Arab Spring, a military campaign against the Islamic State (or ISIS), and an all-consuming negotiation with Iran.
- More than 3,000 people now attend a Bible study in Lebanon, believed to be the largest in the Middle East, which was started by three young adults. | Credit: Charbel El Hajj Initially, the Bible study gatherings took place on Mondays.
- Oil prices were 40 percent lower before the Iran war began, pointing instead to US military action in the Middle East as the primary reason for rising diesel prices, one that Beauchamp says “threatens to tip the world economy into recession”.
- Here’s a look at the latest news in the Middle East.
- A US intelligence report produced by AI with false information nearly led to a confrontation between Washington and Beijing after it mistakenly surmised that a Chinese ship was carrying nuclear components to Iran during the Middle East war, CNN reported over the weekend, citing sources familiar with the episode.
- On the other, global uncertainty tied to the rapidly expanding Middle East conflict is driving investors toward the U.S. dollar.
- Multiple U.S. embassies in the Middle East warned Americans Tuesday of the "potential for unforeseen escalation" as U.S. Central Command launched fresh strikes on Iran.