Oil Prices Steady as Israel Rejects Ceasefire Offer from Hamas
Oil Prices Hold Steady Amid Middle East Tensions
Oil prices remained relatively unchanged on Friday, as ongoing tensions in the Middle East kept the market on edge. Israel’s rejection of a ceasefire offer from Hamas has kept oil prices in focus, with both Brent and WTI crude on track for weekly gains.
Market Reaction and Price Movements
Brent crude futures slipped 6 cents to $81.57 a barrel, while U.S. West Texas Intermediate crude futures rose 2 cents to $76.24 a barrel. The previous session saw both benchmarks rise about 3% in response to Israeli forces’ actions in the southern border city of Rafah. Prime Minister Benjamin Netanyahu’s rejection of a proposal to end the war in the Palestinian enclave has further heightened tensions in the region.
Impact on Oil Prices and Production
The resulting tensions have led to elevated oil prices, with both Brent and WTI set to gain more than 5% for the week. However, despite the conflict, there has been no impact on oil production, with non-OPEC output from Norway and Guyana increasing. Additionally, Russia is exporting more crude than planned under an OPEC+ deal, despite technical outages at its refineries.
Global Factors Affecting Oil Prices
Deflation risks in China, the world’s top importer of oil, are also contributing to the pressure on global oil prices. Early weakness in China’s equity markets and concerns following a shocking CPI figure have further undermined confidence ahead of the Lunar New Year celebrations.
Political and Economic Developments
On the political front, U.S. officials have made pointed criticisms of Israel’s civilian casualties in Gaza, while a Hamas delegation arrived in Cairo for ceasefire talks with mediators Egypt and Qatar. Meanwhile, the U.S. Treasury Department has sanctioned entities in the United Arab Emirates and a tanker registered by Liberia for violating a cap placed on the price of Russian oil by a coalition of Western nations.
Incidents Affecting Oil Refineries
Incidents like the fire at the Ilsky oil refinery in Russia’s southern Krasnodar region further add to the volatility in the oil market. The fire, which was promptly put out, serves as a reminder of the potential disruptions that can impact oil production and supply chains.
Market Outlook and Expert Analysis
Despite the current geopolitical and economic challenges, experts believe that oil prices will continue to trade within a rangebound pattern. They emphasize the need to consider both geopolitical factors and fundamentals in assessing the future trajectory of oil prices.
