Oil prices rise amid low inventories, tensions in the Middle East
Date
8/14/2024 4:41:38 AM
(MENAFN) Oil prices experienced a rise on Wednesday as reports indicated a decline in U.S. crude and gasoline inventories, alongside growing concerns about a potential escalation of conflict in the Middle East that could disrupt global oil supplies. By 0009 GMT, brent crude futures had increased by 30 cents to USD80.99 per barrel, while U.S. West Texas Intermediate (WTI) crude futures saw a 38-cent rise, reaching USD78.73 per barrel. According to market sources referencing data from the American petroleum Institute (API), U.S. crude oil and gasoline inventories decreased significantly last week, while distillate inventories saw a modest increase. Specifically, the API data revealed a 5.21-million-barrel drop in crude oil inventories, coupled with a 3.69 million barrel reduction in gasoline stocks, and a 612,000 barrel increase in distillates. These inventory declines suggest a rise in demand in the U.S., the world's largest oil consumer, adding upward pressure on oil prices.
The market is also closely monitoring the unfolding geopolitical situation in the Middle East, particularly in light of recent developments involving Iran and Israel. Following the assassination of Hamas political bureau chief Ismail Haniyeh in Tehran late last month, which Iran has attributed to Israel, tensions have escalated, with Iran vowing a harsh response. Although Israel has neither confirmed nor denied its involvement, the U.S. Navy has taken precautionary measures by deploying warships and a submarine to the region to strengthen Israeli defenses. Analysts have warned that any further escalation of the conflict could have significant implications for oil supplies from Iran and neighboring oil-producing countries, potentially leading to reduced inventories and higher prices.
Meanwhile, the International Energy Agency (IEA) maintained its forecast for global oil demand growth in 2024 but adjusted its outlook for 2025, citing the negative impact of a weak Chinese economy on global consumption. This revision by the IEA suggests that while immediate factors such as inventory declines and geopolitical tensions are supporting current price levels, broader economic concerns, particularly in China, may limit significant price increases in the longer term. As the market continues to assess these factors, the release of official government data from the U.S. Energy Information Administration later on Wednesday will be closely watched for further insights into inventory trends and demand dynamics.
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