Oil Prices Surge Amidst Rising Tensions in the Middle East
In a whirlwind of geopolitical turmoil, oil prices surged on Friday, poised for a remarkable 10 percent weekly gain. Investors braced themselves for the possibility of a broader conflict in the Middle East that could disrupt crude oil flows, following President Biden’s remarks about potential Israeli strikes on Iranian oil facilities.
At 2:20 p.m Saudi time, Brent crude futures soared by $1.09, or 1.4 percent, reaching $78.71 a barrel. Similarly, US West Texas Intermediate crude futures climbed by $1.08, a 1.5 percent increase, hitting $74.79 a barrel.
Analyst Ashley Kelty from Panmure Gordon noted, “While Iran’s recent rocket attack on Israel may have preserved its reputation, concerns are mounting over possible Israeli retaliation targeting Iranian oil infrastructure, which could escalate tensions and draw neighboring countries into the conflict.”
President Biden revealed that the US is deliberating its stance on supporting Israeli strikes on Iran’s oil facilities in response to Tehran’s recent missile attack on Israel. Meanwhile, Israel’s military carried out new airstrikes in Beirut as part of its ongoing conflict with the Lebanese armed group Hezbollah. Biden refrained from public negotiations when questioned about advising Israel against attacking Iran’s oil facilities.
Biden’s statements triggered a 5 percent surge in oil prices on Thursday, as Israel contemplates its next moves following Iran’s aggressive actions earlier in the week.
Analyst Alex Hodes from StoneX highlighted, “The market was already vulnerable due to significant short positions and limited net length, making it susceptible to sudden price hikes.”
Despite concerns about oil supply disruptions driving up prices earlier in the week, OPEC’s spare production capacity has helped stabilize the market. Furthermore, global crude supplies have yet to be significantly impacted by the unrest in the Middle East.
In a separate development, Libya’s eastern-based government and the Tripoli-based National Oil Corp. announced the reopening of all oilfields and export terminals after resolving a dispute over central bank leadership. This resolution marks the end of a crisis that severely impacted oil production in the region, allowing the country to potentially double its production levels to around 1.2 million barrels per day.