Oil stable, investors monitor geopolitical risk

Oil stable, investors monitor geopolitical risk
Oil stable, investors monitor geopolitical risk

Oil prices held steady on Friday, consolidating their gains from the week, as investors carefully monitored geopolitical risk in the Middle East after crude inventories fell in the United States. Around 09:45 GMT (11:45 a.m. in Paris), the price of a barrel of Brent from the North Sea, for delivery in August, lost 0.08% to 85.64 dollars.

Its American equivalent, the barrel of West Texas Intermediate (WTI), for delivery the same month, which is the first day of use as a reference contract, lost 0.04% to 81.26 dollars. The two global benchmarks are maintained and Brent remains “above the $85 level, poised to close the week with a gain of over 3%”commented Ricardo Evangelista, analyst at ActivTrades.

The Israeli army and Hezbollah exchanged new cross-border fire during the night from Thursday to Friday after an escalation in bellicose rhetoric between the two protagonists, raising fears of an extension of the war. “The entire region could soon be drawn into a conflict that could disrupt one of the main production areas on the planet”recalls Mr. Evangelista, even if for the moment, the supply of crude oil is not affected.

If supply remains monitored by investors, questions about demand seem more “important and have a greater influence on prices”, notes Ole Hvalbye, analyst at SEB. The day before, the US Energy Information Administration (EIA) announced a contraction in commercial crude oil inventories of 2.5 million barrels last week in the United States.

“We note that the upward trend in global oil stocks has stopped”underline DNB analysts for their part. At the same time, the European Union approved a new package on Thursday “substantial” of sanctions against Russia, at war with Ukraine. There is a ban on the transshipment of liquefied natural gas (LNG) in the European Union, according to the document listing these sanctions.

Read alsoUnited States: Crude oil stocks fall, demand jumps

“Since only re-exports to third countries are affected by the sanctions, and not imports into the EU in general, the consequences on the market should be limited”these new sanctions do not reduce the volumes of natural gas supplied to the EU, explained Carsten Fritsch, analyst at Commerzbank. These new sanctions also aim to limit Russia’s use of cargo ships. “ghosts” to circumvent EU sanctions on Russian oil exports.

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