March 3, 2024
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OIL & GAS RENEWABLE ENERGY

Oil Prices Surge by 7% Amid Middle East Tensions and Ukraine-Russia Conflict

Oil prices surged on Friday, marking nearly a 7% increase for the week, as tensions in the Middle East persisted following Israel’s rejection of a ceasefire offer from Hamas.

Brent crude futures rose by 79 cents, reaching $82.42 a barrel, while U.S. West Texas Intermediate crude futures increased by $1.02 to $77.24 a barrel. The escalation in oil prices was fueled by continued deadly air strikes by Israeli forces on Gaza, particularly after the bombing of Rafah on Thursday, which had previously contributed to a 3% rise in oil prices.

Analysts noted the ongoing tensions in the Middle East, emphasizing that the lack of progress towards a ceasefire has sustained market uncertainty. Israeli Prime Minister Benjamin Netanyahu’s dismissal of a Hamas ceasefire proposal further exacerbated concerns, with experts suggesting that without a prospect for peace, oil prices remained influenced by conflict premiums.

In addition to tensions in the Middle East, Ukraine’s drone attacks on two oil refineries in southern Russia also contributed to market volatility. The attacks resulted in a fire at the Ilsky refinery, while the Afipsky refinery was also targeted.

Furthermore, Russia’s unexpected increase in crude exports in February, surpassing its agreed quota under the OPEC+ deal due to drone attacks and technical outages at refineries, added pressure to oil markets. Analysts highlighted the need for Russia to demonstrate compliance with OPEC+ production cuts, especially amidst concerns over its ability to reduce exports without weather-related constraints.

Meanwhile, the U.S. Treasury Department imposed sanctions on three entities based in the United Arab Emirates (UAE) and one Liberian-registered tanker for violating the cap on the price of Russian oil set by Western nations. This move reflects ongoing efforts to enforce restrictions on trade with Russia amid geopolitical tensions.

The combination of these factors underscores the volatility and uncertainty prevailing in global oil markets, with geopolitical tensions and supply disruptions continuing to shape price dynamics.

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