Oil continues its gains after tensions in the Middle East pushed Brent crude above $90 – Business News (Trending Perfect)

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(Bloomberg) – The price of oil rose for the fourth day amid escalating tensions in the Middle East, after crossing the $90 per barrel threshold in the previous session.

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Brent crude oil rose above $91 to near the highest level since October, while WTI approached $87. Israel intensified its preparations for possible retaliation by Tehran after it struck an Iranian diplomatic compound in Syria, raising fears of a broader regional conflict.

Crude oil is up 18% this year amid geopolitical tensions in the Middle East and Ukraine, as well as OPEC+ supply restrictions and healthy demand. The conflict between Israel and Hamas has led to Houthi attacks on ships in the Red Sea, driving up transportation costs, but has not yet escalated into a broader war in a region that provides about a third of the world's oil supplies.

Ceasefire talks between Israel and Hamas – which could see the release of hostages held in Gaza – remain at an impasse. The Israeli Economy Minister said he does not trust Qatar's ability to act as a mediator with Hamas, which is classified as a terrorist organization by the United States and Europe.

“The broader tensions in the Middle East stemming from the Gaza war are likely to be at their highest levels in months,” said Vandana Hari, founder of Vanda Insights in Singapore. “Crude oil reflects those fears of a conflagration in the Middle East.”

Earlier this week, OPEC+ chose to stick to supply cuts for the first half of the year, keeping global markets tight and supporting a price rally. A panel of key members led by Saudi Arabia recommended no changes to the policy in an online review meeting. This means that approximately 2 million barrels per day of production restrictions will remain in place.

Market watchers have become more optimistic in recent weeks. JPMorgan Chase & Co. said Brent crude has the potential to rise to $100 a barrel this year if Russia's decision to cut production is not balanced by other countermeasures. Meanwhile, ANZ Banking Group Limited raised its three-month forecast to $95.

Some oil metrics indicate further progress. Time spreads are strengthened, while call options – which profit when oil prices rise – are traded at a premium to the opposite call options. Money managers also increased their net long positions.

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