Thursday, 23 May 2024

Oil prices rise amid tension in the Middle East

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Oil rose about 1% on Friday due to geopolitical tension in the Middle East, but suffered a weekly loss due to negative expectations from the International Energy Agency for the growth of global demand for crude and concerns about the slowdown in US interest rate cuts.

According to Reuters, Brent crude futures rose 71 cents, recording $90.45 per barrel, while US West Texas Intermediate crude futures rose 64 cents to $85.66.

Brent fell 0.8 percent on a weekly basis, compared to a decline of more than 1 percent for US crude.

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Fears of a possible Iranian response to an attack by suspected Israeli warplanes on the Iranian embassy in Damascus at the beginning of this month contributed to supporting oil prices, which approached their highest level in six months this week, despite discouraging factors such as an increase in US inventories.

An American official said that the United States expects an attack by Iran on Israel, but it will not be large enough to drag Washington into war. Iranian sources said that Tehran indicated a response aimed at avoiding a major escalation.

Analysts at ING said they expect the oil rise to subside unless there is further escalation in the Middle East or a supply disruption.

Prices trimmed their gains for a short period after the International Energy Agency lowered its forecast for growth in global oil demand in 2024 to 1.2 million barrels per day. However, the Organization of the Petroleum Exporting Countries (OPEC) expected on Thursday that growth would record one million barrels per day higher than the agency’s expectations, which is support prices.

Friday’s gains erased some of the losses recorded in the previous session, which was dominated by concerns about US inflation, which reduced hopes for a cut in interest rates in June.

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