Oil Prices Remain Steady as Middle East Supply Concerns Ease
Concerns about Potential Supply Disruptions Subside
Oil prices in early Asian trade on Wednesday showed little change as worries eased regarding potential disruptions in supply due to the conflict between Israel and the Palestinian Islamist group Hamas. This development has brought some relief to the market.
Oil Prices Stabilize
The price of oil remained relatively stable in early Asian trade on Wednesday. Brent crude rose by 12 cents to reach $87.77 a barrel, while U.S. West Texas Intermediate (WTI) crude saw a slight increase of 3 cents, reaching $86.00 a barrel.
Temporary Surge in Prices
On Monday, Brent and WTI experienced a surge of over $3.50 due to concerns that the military clashes between Israel and Hamas could escalate and spread beyond Gaza. However, prices settled lower during Tuesday’s session.
Supply Concerns and Middle East Impact
Although Israel’s oil production is minimal, the market still worried that an escalation of the conflict could impact Middle East supply and exacerbate an expected deficit for the rest of the year.
Iran’s Alleged Involvement
While U.S. officials have implicated Iran in the Hamas attack on Israel, no credible evidence of Iran’s involvement has surfaced yet. The presence of political risk has prevented crude prices from falling further.
Threats to U.S. Interests
Powerful armed groups aligned with Iran in Iraq and Yemen have threatened to target U.S. interests with missiles and drones if the United States intervenes to support Israel. This heightens tensions in the region.
Positive Developments in Venezuela-U.S. Relations
In a positive development for oil supply, Venezuela and the U.S. have made progress in talks that could lead to sanctions relief for Caracas. One potential outcome is allowing at least one additional foreign oil firm to purchase Venezuelan crude oil under certain conditions.
Overall, oil prices have stabilized as concerns about potential disruptions in supply due to the Israel-Hamas conflict have eased. Although the situation remains tense, the market is cautiously monitoring developments in the Middle East and their potential impact on oil supply.
