The barrel of Brent oil exceeded the symbolic mark of 80 dollars on Monday, investors fearing a flare-up of the conflict in the Middle East, precisely one year after the Hamas attacks in Israel. Around 3:25 p.m. GMT (5:25 p.m. in Paris), the price of a barrel of Brent from the North Sea, for delivery in December, rose 2.63% to $80.10. Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in November, rose 2.85% to $76.51.
The price of oil is rising, at its highest level in more than a month, as “no outcome is in sight for the conflict in the Middle East which risks spreading further”says Susannah Streeter, analyst at Hargreaves Lansdown. Israeli warplanes bombed on Monday “around thirty villages” in southern Lebanon, bordering northern Israel, “in less than half an hour”announced the official Lebanese agency ANI. For its part, the Israeli army announced that«environ 135 projectiles» fired by Lebanese Hezbollah had entered Israeli airspace.
Investors especially fear an attack by Israel on Iranian oil production infrastructure. Many speculative operators bet massively downward on the price of black gold until mid-September, but Iran’s strikes on Israel and the latter’s expected response have tensed the market. “Investors have the feeling of an imminent response from Israel on Iran”confirmed to AFP Jorge Leon, of Rystad Energy.
American good health
Iran is one of the ten largest oil producing countries and has the third largest proven reserves in the world, behind Venezuela and Saudi Arabia. Iran produced 3.4 million barrels per day in August, according to the International Energy Agency (IEA). Therefore, speculators “are now hedging against a rise in prices, in fear of oil disruptions in the Middle East”explains Giovanni Staunovo, analyst at UBS, to AFP, which is driving prices up.
The good health of the American economy is also pushing prices up. Friday’s publication of a stronger-than-expected report on the US jobs market reassures markets about the United States’ ability to increase global oil demand. However, analysts warn of an overabundant black gold market in the coming months. OPEC+ (Organization of the Petroleum Exporting Countries and their allies) maintained its plan to increase production by an additional 2.2 million barrels per day from December. Non-OPEC+ member countries, “Brazil, Guyana, Norway and the United States are also increasing their production”says Stephen Innes. According to him, “the oil market is in turmoil, caught in a whirlwind” contrary indicators.
