Crude Oil on the Rise: Oil prices rose by more than $4 per barrel early Monday morning in Asian trade, which was a big change for the global oil market. This quick rise in violence was caused by fierce fighting over the weekend between Israeli and Hamas forces, which worsened the already unstable political situation in the region.
At 1:10 GMT, Brent crude went up a sturdy $4.18, or an amazing 4.94%, to hit $88.76 per barrel. While this happened, U.S. West Texas Intermediate crude showed its strength. It ended at $87.02 a barrel after going up a huge $4.23, or 5.11%.
It was interesting to see how much oil prices went up after falling sharply the week before, with West Texas Intermediate falling by 8% and Brent falling by 11%. While all of this was happening, people were still worried about how higher interest rates would affect demand worldwide.
In the midst of all this chaos, the Palestinian Islamist group Hamas put on a military show on Saturday that launched a bombing campaign against Israel that had never been seen before. Because of this, hundreds of Israelis died, leading to a series of Israeli air raids on Gaza until Sunday.
Analysts at the big Australian bank ANZ say that the rise in geopolitical risk in the Middle East will likely keep oil prices high and bring about a time of greater volatility.
This violent whirlwind has effects beyond just causing trouble in the area. The worsening of tensions makes it harder for the U.S. to help Saudi Arabia and Israel make peace and other diplomatic attempts in the area. In return for a defence deal between the U.S. and Saudi Arabia, the Kingdom would get along better with Israel. The balance of this deal is now very close to being dangerous.
Also Read: Kuwait Supply Cut Rattles Asian Crude Oil Market Amidst Global Shifts
On Friday, sources said Saudi officials were willing to increase oil supplies over the next year to negotiate a possible deal with Israel. A rise in Saudi output of this size would have eased the supply blockade that significant sources like Russia and Saudi Arabia have been putting in place for months.
There is a chance that Saudi Arabia and Israel will get back together, which makes it less likely that relations between Saudi Arabia and Iran will improve. This could stop recent progress toward peace.
The killings have been condemned by everyone in the world. Still, Iran and Hezbollah, Iran’s loyal ally in Lebanon, have joined the chorus of support. Some people said Iran might have been involved in the attacks during this trouble. The Israeli government has already said that this is true.
Smart analyst Vivek Dhar at the Commonwealth Bank of Australia says that for this set of events to have a long-lasting effect on oil markets, there needs to be a constant limit on oil transportation or production. According to his theory, if the West officially proves a link between Iranian intelligence and the Hamas attack, it could harm Iran’s oil supply and exports. The stage is set for this geopolitical play, and the oil markets can’t wait for it to end.
Our Reader’s Queries
Why are crude oil prices rising now?
According to Rob Thummel, managing director at Tortoise Capital, the recent events in the Red Sea are heightening geopolitical risk. As a result, oil prices are on the rise as traders evaluate the possibility of a supply disruption due to the increased geopolitical risk.
Is crude oil production increasing?
Our projections indicate that the production of liquid fuels worldwide will experience a modest increase of 0.6 million barrels per day (b/d) in 2024. This growth rate is expected to slow down from the 1.6 million b/d increase in 2023. Our latest forecast shows a decrease of 0.4 million b/d in growth for 2024 compared to the previous month’s STEO report.
Is oil expected to rise again?
Our analysis predicts a rise in the Brent crude oil spot price, with an expected increase from $78/b in December to $84/b in the first half of 2024. This is due in part to the recent OPEC+ production cuts. However, despite these cuts, we have revised our forecast for the Brent price in 2024 to a lower level.
How much will oil prices go up in 2024?
According to the EIA, the global benchmark Brent crude is predicted to have an average price of $82 per barrel in 2024 and $79 in 2025. These figures are similar to the 2023 average of $82.