Oil Prices Gain as Middle East Tensions Continue
Oil Prices Rise on Middle East Tensions
Oil prices settled higher on Friday, marking a weekly gain as rising tensions in the Middle East continued to raise concerns about potential supply disruptions. This comes at a time when worries about the demand outlook for oil remain elevated.
Rising Prices and Tensions in the Middle East
At 14:30 ET (19.30 GMT), the price of oil rose 1.5% to $79.19 per barrel, while oil expiring in April rose 0.6% to $83.35 a barrel.
Support from Middle East Tensions
Concerns about a broader conflict in the Middle East, which accounts for a third of global oil output, remained a prominent factor as Israel continued its offensive in Rafa, the southern city of Gaza. Additionally, Hezbollah chief Hassan Nasrallah vowed to escalate its battle with Israel, further adding to the tension in the region.
Impact on Oil Prices
Fresh concerns about supply disruptions in the Middle East helped drive sentiment on oil prices higher, offsetting worries about a potential economic slowdown due to a higher for longer interest rate environment in the U.S.
Global Economic Concerns
Both the US and Europe entered a technical recession in the fourth quarter of 2023, as per GDP data released on Thursday. This adds to the jitters about global growth, especially after the International Energy Agency (IEA) reported that global oil demand was slowing.
IEA Forecast and Supply Outlook
The IEA trimmed its 2024 global oil growth forecast to 1.22 million barrels per day (bpd) from 1.24 million bpd. It also forecasted higher supplies in 2024 amid record-high U.S. production and reluctance among members of the Organization of the Petroleum Exporting Countries to enact deeper supply cuts.
Conclusion
The oil market continues to be influenced by geopolitical tensions and concerns about supply and demand dynamics. The ongoing situation in the Middle East has heightened worries about potential disruptions, while global economic concerns continue to impact sentiment around oil prices.
