Tuesday, 28 May 2024

Oil prices rise as tensions escalate in the Middle East


Oil prices rose during trading on Thursday, after rising by $1 per barrel in the previous session, as traders prepared for the escalation of the Middle East crisis and the possibility of Iran getting involved in it.

Iran is the third largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC).

By 06:32 GMT, Brent crude futures rose five cents to $90.53 a barrel, while US West Texas Intermediate crude futures rose four cents to $86.25 a barrel.

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According to Reuters, both contracts rose more than 1% in the previous session after three of the sons of Ismail Haniyeh, head of the political bureau of the Palestinian Islamic Resistance Movement (Hamas), were killed in an Israeli air strike on Gaza, which raised fears of a faltering ceasefire talks between the two sides. . Earlier this week, Israel and Hamas began a new round of negotiations regarding their more than six-month-old war in Gaza, but those discussions did not result in any agreement.

“Prices remain sensitive to geopolitical developments in the Middle East, with market participants pricing in the risk of supply disruption if tension persists for a longer period,” said IG’s Yip Jun Rong.

He added that the upward trend in oil may continue as the geopolitical situation in the Middle East remains difficult.

The region is anticipating possible Iranian retaliation following a suspected Israeli air strike on the Iranian embassy in Syria at the beginning of the month. A Bloomberg News report on Wednesday said that the United States and its allies believe that major missile or drone attacks by Iran or its proxies against Israel are imminent.

The US State Department said on Wednesday that US Secretary of State Anthony Blinken told Israeli Defense Minister Yoav Galant that the United States will stand by Israel against any threats from Iran.

“The market has become increasingly concerned about the possibility of the war between Israel and Hamas expanding across the Middle East, putting oil supplies at risk,” said Daniel Haines, an analyst at ANZ.

Oil market traders are also awaiting the monthly oil market report issued by OPEC later today, Thursday, and the oil market report issued by the International Energy Agency on Friday.