June 22, 2024
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OIL & GAS RENEWABLE ENERGY

Oil Prices Rise, As Tensions Increase in The MiddleEast

As the prospect of  ceasefire deal on Gaza, appeared slim, renewing fears the Israel-Hamas conflict could still widen in the key oil producing region, and Saudi Arabia‘s hike in June crude prices for most regions, prices of oil is seen to have increased on Monday.

Brent crude futures gained 51 cents, or 0.6%, to $83.47 a barrel at 0636 GMT, while U.S. West Texas Intermediate crude futures were at $78.64 a barrel, up 53 cents, or 0.7%.

Both futures contracts posted their steepest weekly loss in three months last week, with Brent falling more than 7% and WTI down 6.8%, as investors weighed weak U.S. jobs data and the possible timing of a Federal Reserve interest rate cut.

Anticipations for a Gaza ceasefire, eased the tension for a geopolitical risk factor in oil prices.However, hopes were lost as on Sunday, Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages, and Israeli Prime Minister Benjamin Netanyahu flatly ruled that out.

With most of the long positions in oil cleared last week, the risks appear to be for WTI prices to rebound back towards $80 in the early part of this week, noted IG markets analyst Tony Sycamore.

Also, Saudi Arabia raised the official selling prices (OSPs) for its crude sold to Asia, Northwest Europe and the Mediterranean in June, signalling expectations of strong demand this summer.

“After falling a little more than 7.3% last week due to easing geopolitical tensions, ICE Brent has started the new trading week on a stronger footing, opening higher,” ING’s head of commodities research Warren Patterson said in a note.

This comes after Saudi Arabia raised June OSPs for most regions amid a tightening of supplies this quarter, he added.

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