Key information
- Brent crude oil futures settled at $73.10 a barrel, up 0.4 percent.
- WTI crude oil gained 0.3 percent, closing at $69.49 a barrel.
- Iran’s potential retaliation against Israel contributed to higher prices, but record U.S. oil production had a downward effect on prices throughout the week.
Oil prices rose slightly on Friday amid concerns over potential Iranian retaliation against Israel. Reports indicated that Iran was preparing to launch an attack from Iraq in the coming days, escalating tensions in the Middle East. However, these gains were partially offset by record oil production in the United States, which put downward pressure on prices throughout the week.
Brent futures settled at $73.10 per barrel, up 0.4 percent, while WTI gained 0.3 percent, closing at $69.49 per barrel. Despite hitting highs of more than $2 a barrel in early trading, both benchmarks posted weekly declines. Brent fell about 4 percent and WTI fell about 3 percent.
Global oil production and OPEC+ response
Analysts suggest Iran’s response could be limited, similar to Israel’s limited strike last weekend. The primary objective appears to be to make a show of force rather than start open war. The current conflict between Iran and Israel stems from broader hostilities in the Middle East, sparked by the fighting in Gaza.
OPEC member Iran produced around 4 million barrels per day (bpd) of oil in 2023. Projections indicate that Iran’s oil exports could reach around 1.5 million bpd in 2024 , an increase from estimates of 1.4 million bpd in 2023.
United States oil production and economic impact
Meanwhile, OPEC+ is considering delaying its planned production increase in December due to concerns over slowing oil demand and rising supply levels. A decision on this could be made as early as next week. This group includes OPEC members and their allies, notably Russia and Kazakhstan.
Record production figures from US oil companies are contributing to upward pressure on oil prices. Exxon Mobil reported record global production, while Chevron achieved record production in the United States. Additionally, the U.S. Energy Information Administration (EIA) revealed that drillers extracted a record 13.5 million bpd of oil, surpassing previous records set in August and forecast for years. 2024 and 2025.
US labor market and economic projections
Despite these developments, U.S. job growth nearly stagnated in October, as strikes in the aerospace industry and hurricanes affected survey response rates. This uncertainty surrounding the job market complicates economic projections ahead of the presidential election, where polls indicate a tight race between Vice President Kamala Harris and former President Donald Trump.
Economists predict the Federal Reserve will cut interest rates by 25 basis points next week, continuing its trend of easing monetary policy after aggressively raising rates in 2022 and 2023 to combat inflation . The possibility of lower interest rates could boost economic growth and increase demand for oil.
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