Oil Prices Surge as Israel-Hamas Tensions Worsen
Oil prices rise amid escalating Israel-Hamas conflict
Oil prices experienced a significant surge in Asian trade on Wednesday following a deadly explosion at a Gaza hospital, which hindered U.S. diplomatic efforts to resolve the Israel-Hamas war. Additionally, industry data revealed that U.S. inventories decreased more than anticipated last week.
U.S. President Joe Biden cancels visit to Jordan
The White House announced that President Joe Biden will no longer visit Jordan as part of his trip to Israel. Jordan’s Foreign Minister, Ayman Safadi, stated that a planned summit between leaders from the U.S., Egypt, and Palestine would not take place. The purpose of the trip was to maintain support for Israel while also appeasing Arab states and preventing further escalation in the conflict.
Explosion at Gaza hospital dampens hopes for deescalation
An explosion at a crowded hospital in Gaza City, resulting in the reported deaths of hundreds of Palestinians, drew international condemnation and diminished prospects for a swift deescalation in tensions in the Middle East. Both Israeli and Hamas forces were blamed for the blast, intensifying global outrage.
Fears of crude supply disruption in the Middle East
Concerns about the spillover of the Israel-Hamas conflict affecting oil supplies in the Middle East region have been reignited. These concerns have been fueling the recent increase in oil prices, with Brent futures surpassing the crucial $90 per barrel mark.
Oil prices rebound as tensions persist
Oil prices have bounced back from previous losses, with a 2.3% jump in Brent crude to $91.97 a barrel and a 2.6% surge in West Texas Intermediate (WTI) crude to $87.63 a barrel. Despite facing headwinds from a stronger dollar and concerns about higher interest rates, the ongoing Israel-Hamas conflict and the potential involvement of other Middle Eastern countries continue to support oil prices.
China’s strong economic data offers support
In addition to the geopolitical tensions, stronger-than-expected third-quarter economic data from China, the world’s largest oil importer, has provided support to oil markets. Monetary stimulus measures implemented by Beijing have started to yield positive results, further boosting market sentiment.
U.S. stockpile data indicates tightening supplies
The American Petroleum Institute’s (API) data revealed that U.S. inventories declined by 4.4 million barrels in the week ending October 13, surpassing expectations of a draw of 1.3 million barrels. This draw comes after a significant build-up in the previous week, with U.S. production reaching new highs. The API data also indicated increased exports and steady consumption of gasoline and distillates.
Positive outlook for oil amid global supply cuts
Robust economic indicators and tightening supplies, resulting from production cuts by Saudi Arabia and Russia, are expected to keep crude oil prices supported in the coming months. Despite potential economic headwinds, the anticipation of tighter global oil supplies remains a driving force in the market.
Upcoming U.S. economic cues
Investors are awaiting further insights into the U.S. economy, including an address by the Federal Reserve Chairman, which is scheduled for Thursday. These cues will likely influence market sentiment and provide additional guidance for oil prices.
