June 13, 2024
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Oil Prices Rise for Second Consecutive Week

Oil prices continued to surge on Friday, poised for a second consecutive weekly gain, as escalating fears over the Israel-Gaza crisis spreading throughout the Middle East raised concerns about potential disruptions in one of the world’s top-producing regions.

Brent crude futures saw an increase of 75 cents, reaching $93.13 a barrel by 0815 GMT, while U.S. West Texas Intermediate crude climbed to $90.04 a barrel, up by 67 cents. The more active December WTI contract also rose by 81 cents, reaching $89.18 a barrel, according to Reuters.

Tensions intensified this week due to an explosion at a Gaza hospital and the anticipation of an Israeli ground invasion, leading to a surge in oil prices. Analyst Tony Sycamore from IG highlighted the escalating tensions, stating that the “risk to crude oil” points toward higher prices amid the Israel Defence Forces’ expected entry into Gaza.

Israeli Defence Minister Yoav Gallant’s statement to troops near the Gaza border suggested an imminent ground invasion. Additionally, the U.S. intercepted missiles fired from Yemen towards Israel, intensifying concerns about the conflict’s expansion.

Further supporting the oil prices are forecasts indicating a widening deficit in the fourth quarter. Major producers Saudi Arabia and Russia extended supply cuts, while low inventories, particularly in the United States, added to the market anxiety.

The U.S. Department of Energy announced plans to buy 6 million barrels of crude for delivery to the Strategic Petroleum Reserve in December and January, aiming to replenish the emergency stockpile.

The temporary lifting of U.S. oil sanctions on OPEC member Venezuela is unlikely to prompt immediate policy changes by the OPEC+ producer group. Sources from OPEC+ indicated that any recovery in Venezuelan production would be gradual, making it a non-significant factor in shaping the global oil balance for the foreseeable future.

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