Oil continued its gains in today’s trading, driven by fears of an expanding war in the Middle East and a possible disruption to exports in the main oil-producing region, as Brent approached $80, after last week recording its largest weekly jump since early 2023.
Brent crude futures rose $1.25, or 1.63%, to $79.37 per barrel, at the time of writing the report, and US West Texas Intermediate crude futures jumped $1.5, or 2.3%, to $75.94.
West Texas Intermediate crude oil had earlier risen by more than $2.
Brent rose last week by more than 8%, while West Texas Intermediate crude rose 9.1% due to the possibility of Israel striking Iranian oil facilities in response to the missile attack launched by Tehran on Israel on the first of this October.
Iranian caution
Satellite images published by tanker tracking company Tanker Trackers on Saturday revealed that a number of oil tankers had been evacuated from the waters surrounding the main oil loading station on Iran’s Kharg Island, for fear of being exposed to an Israeli attack.
Since last week, global oil markets have been experiencing tensions over the possibility of Israeli retaliation, after Iran launched a missile attack on Israel earlier last Tuesday evening.
The US investment bank Goldman Sachs raised its forecast for the price of a barrel of oil by 2025, by $20 to reach $96 in the event that Tehran’s production declines by one million barrels per day, due to any hypothesis that it will be attacked.
Priyanka Sachdeva, an analyst at Philip Nova, said the potential escalation of the conflict faced increasing pressure on the demand side.
Missile strike
Rockets fired by Hezbollah hit the city of Haifa, the third largest city in Israel, early Monday. At the same time, Israel appeared ready to expand the scope of ground incursions into southern Lebanon on the first anniversary of the Gaza war, which expanded the scope of the conflict in the Middle East. .
The escalation of the conflict has raised fears that the United States, Israel’s largest ally, and Iran will be drawn into a broader war.
Analysts at ANZ Bank said, “We see that a direct attack on Iranian oil facilities is the least likely response among Israel’s options,” pointing to the excess production capacity owned by the Organization of the Petroleum Exporting Countries (OPEC) amounting to 7 million barrels per day.
The OPEC Plus alliance, which includes OPEC and allies such as Russia and Kazakhstan, is scheduled to begin increasing production starting next December after reducing production in the past few years to support prices due to weak global demand.
Analysts say that OPEC has sufficient surplus oil capacity to compensate for a complete loss of Iranian supplies if Israel destroys this country’s oil facilities, but it will face complications if Iran responds by attacking facilities of its neighbors in the Gulf and closing the Strait of Hormuz on the Arabian Gulf, through which most oil shipments to the world pass.
When the war in the Middle East started a year ago, the price of Brent crude was $88.15, but prices are now about $10 lower.