Oil recovers ground and reaches the barrier of 87 dollars per barrel. However, has lost the bullish trend that it had been forming since June.
In that context, Brent oil is at a crucial point, reaching US$93 per barrel during the session. This rise in the price of crude oil is mainly attributed to the imminent risk that the escalation of the conflict in the Middle East could disrupt the region’s crude oil supplyespecially after Iran’s request to impose an embargo on oil to Israel.
Brent crude oil futures have experienced a notable increase, rising US$2.54, equivalent to 2.8%, thus reaching US$92.44 per barrel. Simultaneously, West Texas Intermediate (WTI) crude oil futures also registered a significant increase of US$2.54, or 2.9%, reaching US$89.2 per barrel.
Both oil benchmarks have experienced gains of more than $3, marking its highest levels in the last two weeks at the beginning of the session. These increases in prices are due to the perception of risk in the markets, especially after hundreds of Palestinians lost their lives in an explosion at a Gaza City hospital on Tuesday. The Israeli and Palestinian authorities blamed each other for this tragic incident.
Oil: the reactions of producing countries to the conflict
Tensions have led to Jordan to cancel a summit that was scheduled with US President Joe Biden, and Egyptian and Palestinian leaders. On her visit to Israel, Biden has expressed her solidarity in the war against Hamas and backed the Israeli version that the explosion at the Gaza hospital was caused by militants.
In a further twist to this tense situation, Iranian Foreign Minister Hossein Amirabdollahian has urged members of the Organization of Islamic Cooperation to impose an oil embargo on Israel. However, heOPEC+ does not plan to take immediate measures in response to this call from Tehran.
On another front, a decrease of 4.4 million barrels in crude oil inventories in the United States is reported during the week ending October 13, compared to the forecast for a drop of 300,000 barrels. These data, coming from the American Petroleum Institute, have raised expectations about the release of official US government data scheduled for Wednesday.
In terms of demand, Official data shows that the Chinese economy has grown faster than anticipated in the third quarter, suggesting that recent measures are helping to sustain a fragile recovery. In addition, oil refinery production in China has reached a record daily rate in September, exceeding the previous year by 12%, to meet the strong demand for fuel during the Golden Week celebrations and the increase in manufacturing activity.
However, in the United States, September retail sales have exceeded expectations, fueling forecasts of a possible increase in interest rates at the end of the year. It should be noted that increases in interest rates, which aim to control inflation, can slow economic growth and reduce demand for oil.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
