Oil rates rise over intensifying Middle East tensions
Date
10/3/2024 7:56:35 AM
(MENAFN) Oil rates saw an uptick on Thursday, driven by escalating tensions in the Middle East, a region that holds the majority of the world’s oil reserves. This increase in prices has raised concerns about potential disruptions to crude oil supply chains. As of 11:01 a.m. local time (0801 GMT), the international benchmark brent crude oil rose by 1.26 percent, trading at USD74.83 per barrel, compared to the previous session's close of USD73.90. Similarly, the US benchmark West Texas Intermediate (WTI) increased by 1.4 percent, reaching USD71.08 per barrel after closing at USD70.10 in the prior session.
The situation has been exacerbated by escalating cross-border fighting between Israel and Lebanon. The Israeli army announced it would conduct "limited, localized" ground raids in southern Lebanon, targeting 24 towns and advising residents to evacuate toward the northern part of the Litani River. Hezbollah, the militant group operating in Lebanon, claimed responsibility for significant casualties among Israeli soldiers during confrontations in two southern Lebanese towns, asserting that the Israeli military was concealing the extent of its losses. In response, Israel confirmed the deaths of eight military personnel, including three officers.
On Tuesday, oil rates surged after Iran, a prominent member of the Organization of the Petroleum Exporting Countries (OPEC), launched approximately 180 ballistic missiles at Israel. The Iranian Islamic Revolutionary Guard Corps (IRGC) claimed that the missile attack was retaliation for the recent assassinations of key figures, including Hamas leader Ismail Haniyeh and Hezbollah leader Hassan Nasrallah. However, the market's upward momentum was tempered by data released late Wednesday from the US Energy Information Administration (EIA), which indicated an increase in US crude oil inventories.
Specifically, US commercial crude oil inventories rose by around 3.9 million barrels for the week ending September 27, contrary to market expectations of a 1.5 million barrel draw. Additionally, gasoline inventories increased by approximately 1.1 million barrels during the same timeframe. Daniel Hynes, a commodity strategist at the Australia and New Zealand Banking Group, noted in an email that rising US inventories provide evidence of a well-supplied market capable of withstanding potential supply disruptions.
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