Prices saw a slight increase today as concerns over possible supply disruptions from the Middle East increased. The rise follows intensified attacks by Israel against Iranian-backed forces, which has revived the specter of a broader regional conflict that could impact oil production and distribution.
November futures were up a modest 16 cents at $72.14 a barrel, while the more active December contract was up 10 cents at $71.64. Similarly, U.S. West Texas Intermediate crude oil futures rose 8 cents to $68.26 per barrel.
These price increases come after a week of declines, with Brent falling about 3% and West Texas Intermediate about 5%. The declines were attributed to concerns over demand, after China’s fiscal stimulus failed to boost market confidence as hoped.
The current price support is partly due to the increased likelihood of Iranian involvement in conflicts in the Middle East. Iran is a major oil producer and a member of the Organization of the Petroleum Exporting Countries (OPEC). ANZ Research noted that escalating attacks in the region increase the risk of supply disruptions to OPEC producers.
Israel’s military activity included the bombing of Houthi targets in Yemen on Sunday, broadening its actions against Iran’s allies. This comes shortly after the announcement of the death of Hezbollah leader Sayyed Hassan Nasrallah, which marks an escalation in the conflict in Lebanon.
In response to heightened tensions, U.S. Defense Secretary Lloyd Austin authorized an increase in military presence in the Middle East. The Pentagon said the United States is prepared to defend its personnel and interests against any actions by Iran, its partners or proxies.
Later today, attention will shift to Federal Reserve Chairman Jerome Powell, who is expected to provide insight into the Fed’s approach to monetary policy easing. Additionally, seven other Fed officials are scheduled to speak throughout the week.
Despite the rise in prices, the market remains under pressure due to OPEC+’s plan to increase production by 180,000 barrels per day in December. Additionally, Libya’s oil exports are expected to resume, which could further influence market dynamics.
Reuters contributed to this article.
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