Oil Prices Rise Amidst Gaza Ceasefire Deadlock
In a dramatic turn of events, oil prices surged on Wednesday following two consecutive days of losses. The Gaza ceasefire talks hit a standstill, reigniting concerns about the stability of oil supplies from the Middle East. This development overshadowed the news of a larger-than-expected build in US crude inventories, reported by Reuters.
Brent and US Crude Futures Edge Up
Brent crude futures saw a 25-cent increase, reaching $89.67 per barrel at 9:50 a.m. Saudi time. Similarly, US West Texas Intermediate crude futures rose by 24 cents to $85.47.
Geopolitical Tensions Impact Oil Prices
Despite the geopolitical tensions in the Middle East arising from the prolonged conflict between Israel and Gaza, both benchmarks continue to remain down by approximately 1.7 percent from the previous week. The uncertainty surrounding the duration of the war in Gaza and its potential to draw in more countries has contributed to the subdued prices.
Risks Remain High Amidst Ceasefire Uncertainty
Market analyst Tony Sycamore from IG in Singapore highlighted the impact of the ceasefire talks on the crude oil market. The failure of the Israeli proposal to meet the demands of Palestinian militant factions has left the situation in limbo. Any escalation in the conflict could involve other countries in the region, especially Iran, a key OPEC member.
US Crude Stocks Increase
Last week, US crude stocks saw a significant rise of 3.03 million barrels, as reported by the American Petroleum Institute. This figure exceeded analysts’ expectations of a 2.4 million barrel increase. The official US government inventory data is eagerly awaited to provide further clarity on the market situation.
Forecast for US Crude Oil Output Revised
The government revised its forecast for US crude oil output, projecting a growth of 280,000 barrels per day to reach 13.21 million barrels per day by 2024. Despite this increase, the Energy Information Administration anticipates Brent crude prices to average $88.55 a barrel in 2024, up from the previous forecast.
Market Reaction to Ceasefire Talks
On Tuesday, both Brent and WTI experienced a decline of over 1 percent as ceasefire discussions between Israel and Hamas continued in Cairo. The situation remains volatile, with potential disruptions looming in the region.
Potential Threats to Oil Supply
Iran’s warning about closing the Strait of Hormuz, a crucial passage for global oil transportation, adds to the uncertainties. Additionally, Turkiye’s decision to restrict exports to Israel until a ceasefire is reached could further impact the oil market dynamics.